All independent schools are facing the imposition of VAT on the tuition fees they charge parents for the education they provide for their children. As announced by the new Labour government last month, VAT is due to be imposed on tuition fees from January 2025.
The Inland Revenue published their first technical paper 2 weeks ago; in short, the paper makes clear that the new government is currently drafting the new regulations to cover their taxation proposals, and that for the time being Independent Schools are not able to register for VAT in advance of the guidance due out next month.
The Independent Schools sector is not some monolith of common provision, but far more diverse than the 93% of schools that make up state education. The sector in England is notably diverse, encompassing a variety of schools that cater to different age groups, educational needs, and philosophies. A significant portion of this sector consists of private schools providing nursery and junior education up to age 11, offering early childhood and primary education with a focus on foundational learning and development.

In addition to these, the sector includes prestigious secondary schools, both boarding and day, as well as single-sex and co-educational institutions. Religious and non-religious schools add to this diversity, along with schools offering specialized curricula in areas such as the arts, sciences, or international education. Importantly, special schools make up about 20% of the Independent Sector, providing tailored education for students with special educational needs (SEN), including physical disabilities, autism, and other learning challenges. This wide-ranging diversity ensures that the Independent Sector in England offers a broad spectrum of educational opportunities.
Bearing the above in mind, the new government’s plans to treat all private schools in the same way, despite their sheer complexity, is a very brave decision, as is the choice to impose the tax so quickly from January 2025. I’ve written previously (https://jameswilding.blog/2024/06/07/doing-the-right-thing-right-there-is-an-even-greater-good/) about the crisis the private nursery sector currently faces, with underfunding endemic and new demands being made to ensure the availability of 30 hours for all eligible families for 3+ and 15 hours reaching down past 2 to 9 months in due course. The government’s decision means that all private schools will have the added complexity of both VATable activities (education) and VATexempt activities (nursery and care) to manage, which in itself will significantly add to the costs for schools in terms of accounting.
Below I copy verbatim the letter written to all ISC schools today, in which Julie Robinson, ISC CEO is quoted. As she makes clear, since the election our sector has been in overdrive working out how manage the genuine cost crisis the tax proposals will put on parents and schools.
Clearly the Principals of Claires Court are taking full notice of our sector’s lead in this matter, and supporting ISC to the hilt.

“Ahead of future communications,we wanted to provide a short update outlining recent events and what you can expect before the beginning of term.

We appreciate news over the summer of an accelerated timescale for the implementation of VAT on school fees (January) came as a shock. Independent schools are under pressure to deal with communications and prepare for the enormous challenges the government’s tax policies bring and we want to do what we can to support and inform you at this most difficult time.

Political meetings

ISC CEO Julie Robinson has met this week with the new minister in charge of independent education, Stephen Morgan. ISC remains your voice in Westminster and will be holding regular meetings with the minister and civil servants on issues affecting independent schools. ISC staff, along with ISBA, have also been liaising with Treasury ministers and officials. We have been engaging in the spirit of building a constructive relationship with the new government on a variety of topics while still ensuring that urgent concerns are communicated about the implementation of its policy to place VAT on fees and, for schools run by charitable trusts, remove business rates relief. Further meetings are due to take place over the coming weeks, and we will continue to press on issues including the timing of implementation and the acute effects anticipated on different areas of education.

VAT and loss of business rates relief: next steps for schools

We are aware that many schools will want to feed into the Treasury consultation on its draft legislation and we very much encourage this. In the ISC monthly report, which will be sent to all schools towards the end of next week, we will be including guidance on how to most effectively fill out the consultation questionnaire. We would recommend completing consultation paperwork only after receiving this guidance.

Also in next week’s monthly report, you will find updated guidance for you, your governors and your school community on engaging with your MP about this issue. Given the significantly shorter timescales involved with regard to the implementation of this policy, we would advise reading and disseminating this information as soon as possible – and, as ever, Matthew Dent is on hand to provide advice.

Legal challenges

Significant speculation has arisen about a potential legal challenge to the government’s policy. ISC, alongside the associations, is receiving ongoing advice from senior legal counsel and any steps we take will be in that context. We are aware of various issues, including human rights and other potential angles, which we are following up with counsel. Rest assured, we are looking at all options. But given the nature of these discussions and the ongoing intense media interest in this topic, we are not disclosing details at this stage.

——————————————————————————

We will continue our work in the media to raise awareness of the issues around VAT and the loss of business rates relief, as well as using the platform this coverage affords us to champion the important place independent schools hold within their local community and across education as a whole.

At the same time, we must recognise that this is a policy the government is committed to. It has confirmed it is set on implementing this manifesto commitment to the timescale as outlined in draft legislation. While we will continue efforts to oppose the policy on principle and push for exemptions and mitigations, we are also urging all schools to prepare for the possibility of a January implementation. ISBA is updating its guidance and holding webinars on the practical steps schools need to take over the coming months – please make sure you keep an eye out for emails from them signposting you to this valuable information. We also expect HMRC to provide guidance and advice for schools in due course.

We will continue to provide updates, though there will be occasions where work is going on behind the scenes that we cannot yet discuss. In the meantime, if you have any particular questions or concerns, please do get in touch with either Simon Nathan (for policy/public affairs), Sarah Cunnane (for media and comms) or Julie Robinson (for general enquiries or support). We appreciate that this is a particularly difficult time for you, for your schools and for the families you serve. Please make use of ISC and of your associations if you need us; we are here to support you however we can.”