Preparing for the new VAT on school fees:
What parents need to know

If your child attends an independent school, you've likely heard that the government will be introducing VAT on school fees.

Until now school fees have been exempt from VAT, however, the government has decided to remove this exemption meaning parents could be looking at facing a 20% increase in their school fees each year. It has recently been announced that anti-forestalling legislation (a set of laws designed to prevent tax avoidance schemes) is in place from 29 July 2024 until 30 October 2024, after which the new legislation will be formally announced and passed.

The anti-forestalling measures mean that any pre-payments of school fees that relate to a term starting from January 2025 onwards will be subject to VAT. If you made pre-payments before the 29 July 2024 you may have managed to avoid the VAT payment on these fees. 

The budget on 30 October 2024 will announce all the ins and outs of the upcoming changes, along with other changes the government will make. As always, we’ll keep you updated on the day with all the relevant information. 

On a positive note, while schools will now need to charge VAT on fees, they will also be able to reclaim VAT on certain expenses, something that wasn’t available before. Additionally, not all services provided by schools, such as transport, are subject to VAT which gives us hope that schools may be able to keep price increases for parents down. This will vary from school to school, so you should have a conversation with the school in the first instance, just to see if they’ve made any plans to mitigate an overall increase in costs to parents. 

Here at Wow we are committed to helping our clients be as tax-efficient as possible, you may have discussed a similar topic with us before, however in light of the VAT introduction we have been working to expand our range of options. If you’re concerned about the upcoming changes to school fees, we would love to have a chat with you and discuss your school fee planning options. You can book a call using this link.