On 29 July 2024, the Chancellor announced that effective from 1 January 2025, all education services and vocational training provided by private schools or connected entities will be subject to VAT at the standard rate of 20%. Boarding services provided by private schools or associated parties will also be subject to this VAT rate.

Draft legislation released on the same date stipulates that fees invoiced or paid between 29 July 2024 and 30 October 2024 will be treated the same as a transaction taking place on 1 January 2025, or the first day of that term.

School fees paid before 29 July 2024 will be subject to the VAT treatment in force at the time of the normal tax point, provided the fee rate for that term was set and known at the time of payment.

If any of the above issues affect you, please speak to us – we may be able to help you plan for some of these potential changes. Of course, more details will be available after the budget, and we will keep you informed then.