VAT on School Fees

Our specialist team can help and support you with understanding, calculating and managing private school VAT. We offer the following VAT services:

• VAT registration process
• Guidance on VAT treatment of income
• Preparing or reviewing VAT returns
• Preparing and reviewing partial exemption calculations
• Maximising recovery under the Capital Goods Scheme
• Structuring advice to ensure efficient VAT recovery
• Cash flow modelling
• Training
• Post implementation VAT reviews

We collaborate with you to understand your challenges, concerns and goals as an educational institution, and provide analytical solutions to ensure you remain VAT compliant every step of the way.

Our exceptional team of experts also provide a range of other tax services, including employment tax and business tax.

Legislation, tax and VAT changes can often bring uncertainty and added pressure but, with our expertise, you can mitigate the impact and set your school up for success. We have set out below some of the ways we can  support you with private school VAT challenges.

Fees in advance

Anti-forestalling legislation applies to all payments made from 29 July 2024 in respect of supplies made from 1 January 2025. This means that fees in advance payments made after 28 July 2024 are no longer effective in setting a tax point. The papers also say that some fees in advance schemes may be challenged if HMRC consider they are ineffective in setting a tax point.

The only detail given is “the scheme involved paying a lump sum to the school in advance, but the details of the supplies that the money was not buying were not determined at the time the money was paid” (i.e. if the money paid did not relate to specific terms’ fees that had already been set).

Boarding and special education needs

The VAT private school legislation confirms that VAT also applies to boarding services and that both education and boarding services are caught if the supplies are made by a “connected person”.

Where pupils with special education needs (SEN) are placed by their parents in a private school, VAT applies, but where they have been placed there under an Education Health and Care Plan (EHCP) funded by the Local Authority (LA), devolved government or non-departmental public body, then the LA will be able to reclaim the VAT. When pupils with an EHCP that could be covered in a state school have been placed by their parents in a private school out of choice, then VAT applies.