Our upcoming webinar
Following the recent announcement by the Government to implement VAT on school fees from 1 January 2025, we are delighted to invite you to join Tracey Young, Partner and Head of Education, alongside Phil Salmon, Partner and Co-Head of VAT for an insight on the draft legislation and what your school should do now.
Key event details:
- Date: Wednesday 4 September 2024
- Location: Online
- Time: 15:30 – 17:00
Register your space here!
Impending changes
The Treasury has released a Technical Note and draft legislation which confirm that the legislation introducing VAT on school fees will apply from the date of the Budget and to VAT on school fees from 1 January 2025. In other words, whilst the legislation takes effect from 30 October 2024, it only applies to supplies made from 1 January 2025.
Anti-forestalling legislation applies to all payments made from 29 July 2024 in respect of supplies made from 1 January 2025. In other words, fees in advance payments made after 28 July 2024 are no longer effective in setting a tax point.
The papers also say that some Fees in Advance schemes may be challenged if HMRC consider they are ineffective in setting a tax point. The only detail they give is “the scheme involved paying a lump sum to the school in advance, but the details of the supplies that the money was not buying were not determined at the time the money was paid”, (i.e. if the money paid did not relate to specific terms’ fees that had already been set).
The papers confirm that VAT will also apply to boarding services and that both education and boarding services are caught if the supplies are made by a “connected person”.
Where pupils with special education needs (SEN) are placed in a private school, VAT will apply, but where they have been placed there under an EHCP funded by the Local Authority (LA), devolved government or non-departmental public body, then the LA will be able to reclaim the VAT.
Where pupils have an Education Health and Care Plan (EHCP) whose needs could be met in a state school, but whose parents have placed them in a private school out of choice, VAT will apply.
The change is being implemented by introducing an ‘exception’ to the VAT legislation which introduces a definition of ‘private school’ and removes it from the list of eligible bodies, thus preventing it from exempting its supplies.
We have been very impressed with their performance, delivery and professionalism since moving to them some three years ago following a tender process. Their sector knowledge is excellent, and this, coupled with the broader technical specialisms they offer, provide us with the level of audit and advisory service we both need and have to be able to evidence to external regulatory parties.