UK Chancellor of the Exchequer Rachel Reeves announced on July 29, 2024 that the government would remove the VAT exemption on private and boarding school fees. UK VAT is a sales tax on goods and services levied on most consumer purchases in the country. The standard rate is 20%.

While private school services have previously been exempt from VAT, Chancellor Reeves has confirmed that the tax will now also be applied to private school fees for grades K-12 starting January 1, 2025. From that point on, “all educational services and vocational training provided for a fee by a private school or related person shall be subject to VAT at the standard rate of 20%.” The same tax regime now also applies to all boarding school services. In addition, all school fees paid on or after July 29, 2024 for school years beginning on or after January 1, 2025 will now be subject to the tax.

The change had already been hinted at in the Labour Party’s manifesto ahead of the UK general election in July 2024, but the industry has been resisting the idea for months, particularly after it became clear last month that the new UK government would introduce the VAT changes months earlier than initially expected.

At the end of July, Julie Robinson, chief executive of the Independent Schools Council (ISC), said: “All parents and schools who have been following the VAT debate are probably already planning for September 2025… Families have made their education decisions months before the election. They cannot adequately plan for their children’s futures based on speculation, uncertainty and constantly changing dates.”

When it became clear that the new VAT regime would not come into force until January 2025 rather than September 2025, Ms Robinson added: “The change also means that the regime would come into force one school year earlier and parents would have missed the opportunity to apply for a place at a state school in the normal cycle.”

“Any parents who may now have to relocate their child face the prospect of admission during the school year, which will be more difficult to arrange and will have a detrimental impact on their child’s education.”

After the change to the VAT regime was confirmed on 29 July, Sarah Cunnane, ISC’s Head of Media and Communications, commented: “We are very concerned about what this policy will mean for our schools and how many of them will be closed. School closures are unfortunately inevitable and will ultimately affect the families who have chosen to use these schools and impact the education of thousands of children.”

In October 2023, the British Boarding Schools’ Association released the results of a survey of Chinese parents. The 2023 edition of the BSA’s annual parent survey collected responses from 1,000 parents of current or prospective students. It found that the introduction of VAT on school fees would influence the decision-making of 60% of responding parents, with 9% saying that VAT would lead them to choose another country for their child’s education.

For further background information, see: