On 29 July 2024, the Chancellor announced that from 1 January 2025, all education services and vocational training provided by a private school, or a connected person, for a fee will be subject to VAT at the standard rate of 20%. Boarding services provided by a private school or a connected person will also be subject to VAT at 20%.

Draft legislation issued on 29 July 2024 specifies that fees invoiced or paid on or after 29 July 2024 and before 30 October 2024 will be treated for VAT purposes as a supply taking place on the later of: (a) 1 January 2025, and (b) the first day of that term.

School fees paid before 29 July 2024 will follow the VAT treatment in place at the time of the normal tax point for these supplies, provided the fee rate for the relevant term had been set and was known at the time of payment.

If these changes affect you, please contact us – we may be able to help you plan for some of the potential impacts. Further details will be available after the budget, and we will keep you updated.