E-petition debate: Children and bereavement
A debate on child bereavement will take place in Westminster Hall on 2 December 2024. The subject for this debate was determined by the Petitions Committee and the debate will be led by Kevin Bonavia MP.
Documents to download
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VAT on private school fees (426 KB , PDF)
How are private school fees charged VAT at present?
VAT (Value Added Tax) is levied on the purchase of many goods and services. It is charged at the standard rate of 20%, though some goods and services are charged a reduced rate of 5% and some are charged a zero rate.
Some goods and services are exempt from the tax. Although the way businesses account for VAT to HM Revenue & Customs will differ if the goods and services they supply are exempt rather than zero-rated, from the perspective of consumers both zero-rated supplies and exempt supplies will be VAT-free.
The supply of education is VAT-exempt. As a consequence private schools do not impose VAT on the fees they charge for attendance at present.
What is the Labour government proposing regarding private school fees?
In its 2024 general election manifesto the Labour Party stated that in government it would remove the VAT exemption that applies to private school fees. Following the election the government announced that private school fees would be charged VAT at the standard 20% rate from 1 January 2025.
The Chancellor Rachel Reeves confirmed the government’s plans to charge VAT on private school fees in her Budget statement on 30 October 2024. Legislation to this effect is included in the Finance Bill 2024-25 which was published on 6 November 2024 (specifically clauses 47-49 of the Bill).
What impact is this policy forecast to have?
It is estimated that extending VAT to private school fees will raise £460m in 2024/25, rising to £1.51 billion in 2025/26. The government forecast that imposing VAT on fees will result in 37,000 pupils leaving the private sector, representing about 6% of the current private school population.
HM Revenue & Customs (HMRC) has published guidance for schools on whether they need to register for VAT, and how schools should charge and reclaim VAT on goods and services related to private school fees.
Further reading
The Library briefing Independent schools: taxation and charitable status provides further details on the independent school sector and the charitable status that some independent schools have. It also discusses the Labour government’s proposal to remove the charitable (business rates) relief currently available to English independent schools that are charities from April 2025.
Documents to download
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VAT on private school fees (426 KB , PDF)
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