Do private schools charge VAT from 2025?

Full answer

On **1 January 2025**, the UK government ended the longstanding VAT exemption for private school fees as part of the Autumn Budget 2024. All independent schools providing education must now charge **20% standard rate VAT** on fees. **What changed:** - Before 1 January 2025: Independent school fees were exempt from VAT (schools couldn't reclaim input VAT but didn't charge output VAT) - From 1 January 2025: Fees are **standard-rated at 20%** — schools charge parents 20% extra and can reclaim input VAT on their purchases **Which schools are affected:** All fee-paying independent schools in England, Scotland, Wales and Northern Ireland, including: - Day schools and boarding schools - Preparatory schools - Sixth-form colleges that are independent **Which schools may still be exempt:** - Schools where the **primary purpose is welfare** rather than education (e.g. some therapeutic or residential care settings) - Schools providing for children with **complex special educational needs** under a local authority EHCP arrangement (the LA-funded portion may be exempt) - Nurseries in some configurations (if below compulsory school age threshold) **Typical fee impact:** A school charging £15,000/year now charges £18,000 — a £3,000 increase. Some schools absorbed part of the VAT through operating efficiencies; others passed the full amount to parents. **Bursaries and scholarships:** The VAT applies to the gross fee — if a bursary reduces the fee paid by parents, VAT applies only to the net amount actually charged. **Business Rates:** Private schools also lost their **charitable business rates relief** (100% mandatory relief) from April 2025.