VAT on School Fees – Expert Guidance for UK Private Schools

Expert VAT Strategies for Private Schools That Reduce Costs and Ensure Compliance

Private schools across the UK now face 20% VAT on their fees. With the right strategy this change is manageable, and it can even create opportunities to recover VAT and protect cash flow. At Axada we help private schools stay compliant with HMRC and uncover savings you may not realise are possible. This schools service draws on our wider VAT and Import Duties expertise.

The new VAT rules for private schools – what has changed?

Until the end of 2024, education and boarding provided by private schools was exempt from VAT. Since 1 January 2025 these services are standard-rated, which means 20% VAT now applies to tuition and boarding fees charged by private schools in the UK.

An anti-forestalling rule also applies. Fees paid on or after 29 July 2024 that relate to school terms from January 2025 onwards are already caught by the new VAT treatment, so pre-payment schemes set up before the change do not avoid the charge.

The government expects the measure to raise around £1.7 billion a year and estimates that average fees will rise by roughly 10%, not the full 20%, because schools can now reclaim VAT on many of their costs. Getting that recovery right is exactly where professional advice pays off.

How the VAT change affects your school

Tuition and boarding fees now standard-rated

The 20% rate applies to education services and to boarding that is closely related to that education. Wider goods and services a school supplies may fall under different VAT treatment, which is why a proper review of each income stream matters.

VAT registration threshold and deadlines

A school must register for VAT once its taxable turnover exceeds £90,000 in a rolling 12-month period, or when it expects to exceed that figure within the next 30 days. The registration deadlines are tight, and late registration can lead to penalties. We handle the timing and the paperwork so nothing slips.

Nurseries, sixth forms and SEN placements

Not every setting is affected in the same way. Nursery classes where 90% or more of the children are under compulsory school age remain exempt. Where a local authority funds a place for a child with an Education, Health and Care Plan (EHCP), the local authority can recover the VAT, while privately funded SEN placements are subject to it. These distinctions are easy to get wrong and worth checking case by case.

Ancillary charges, catering, transport and business rates

Beyond tuition and boarding, schools charge for many extras such as school meals, transport, trips, music lessons, exam fees and before or after school care. Some of these follow the education treatment and are standard-rated, others may remain exempt as welfare or fall outside the scope, so each income stream needs classifying individually. Charitable schools should also plan for the loss of 80% business rates relief from April 2025. We review the full picture so nothing is mistreated.

How Axada helps your school manage VAT

Our tailored VAT services are designed to ensure compliance while exploring ways to maximise your VAT recovery and reduce costs. Here’s how we can help:

We identify ways to reduce your school’s VAT liabilities and maximise VAT reclaims.

We handle everything from VAT registration to preparing returns, allowing you to focus on education.

We streamline your VAT strategy and improve your school’s cash flow.

Our team goes beyond ticking compliance boxes and provides high-level advice to enhance VAT recovery and improve profitability in light of the changes. Beyond VAT, we also support schools with accounting and corporation tax where trading or charitable activities apply.

Why Choose Axada?

• Specialised VAT Expertise: With extensive experience in VAT across various sectors, we understand the unique complexities facing private schools.

• Tailored Support: We customise our services to meet your school’s specific needs, ensuring you receive solutions that work for you.

• Quick Communication: Our 24-hour response time ensures your queries are addressed promptly and efficiently.

• Dedicated Contact Person: You will have one dedicated contact for consistent support throughout our partnership.

• Future-Proofing: Our forward-looking advice ensures that your school is always prepared for further regulatory changes or financial challenges,

Frequently Asked Questions about VAT for private schools

What is VAT on private school fees?

Since 1 January 2025, education and boarding provided by private schools in the UK are subject to standard-rate VAT at 20%. Previously these fees were VAT-exempt.

When did VAT on private school fees start?

The change took effect on 1 January 2025. An anti-forestalling rule means fees paid on or after 29 July 2024 for terms from January 2025 are already subject to VAT.

How much VAT is charged on private school fees?

The standard rate of 20% applies to tuition and closely related boarding fees.

Which schools are affected by the VAT change?

Private schools, independent schools and private sixth form colleges that charge fees for full-time education of compulsory school age or 16-to-19-year-old pupils.

Are nurseries and pre-schools affected?

Nursery classes where 90% or more of the children are under compulsory school age remain exempt from VAT.

What about children with SEN or an EHCP?

Where a local authority funds a place for a child with an EHCP, the local authority can reclaim the VAT. Privately funded SEN placements are subject to VAT.

Does VAT apply to boarding fees?

Yes. Boarding that is closely related to the education provided is standard-rated at 20%.

When does a school have to register for VAT?

Once taxable turnover exceeds £90,000 in any rolling 12-month period, or when the school expects to exceed that figure within the next 30 days.

Can a private school reclaim VAT?

Yes. VAT-registered schools can reclaim VAT on many business expenses, including certain pre-registration and capital costs, subject to partial exemption rules.

Will fees rise by the full 20%?

Not necessarily. Because schools can now recover VAT on their costs, the government estimates average fee increases of around 10% rather than the full 20%.

Which charges beyond tuition are affected?

Tuition and closely related boarding are standard-rated at 20%. Extras such as meals, transport, trips, music lessons, exam fees and wraparound care vary. Some are standard-rated, others may remain exempt as welfare or sit outside the scope of VAT, so each needs to be classified individually.

Are military or diplomatic families affected?

There is no blanket exemption. Families receiving the Ministry of Defence Continuity of Education Allowance are supported through an uplift to that allowance, but the school’s fees themselves are still standard-rated.

Book a free consultation

We invite you to a free initial consultation to assess your VAT position and identify areas for improvement. Don’t miss this opportunity to turn VAT changes to your advantage.

To arrange a meeting, please contact us at 020 3000 6776, via email at info@axadaglobal.com, or through our contact form. We’re here to support you.