Further Education: VAT

The removal of the VAT exemption for private school fees will not impact pupils with the most acute additional needs, where these can only be met in private schools. Local Authorities (LAs) fund pupils’ places in private schools where their needs can only be met in a private institution. In England, where attendance at that private institution is required by a child’s Education, Health and Care Plan (EHCP), LAs will be able to reclaim the VAT on the fees from HMRC. This includes at post-16 special colleges.

Where a single fee is paid for students at special schools or colleges to cover all aspects of the service they provide (including health and social care), the VAT status of that fee will be determined by whether the predominant element of the supply is education. HMRC will publish further guidance to assist schools before the Budget.

The Government will confirm the introduction of these tax policy changes at Budget, at which point the Office for Budget Responsibility (OBR) will certify the Government’s costings for these measures. We expect the changes to raise significant amounts of revenue, securing additional funding to help deliver the Government’s commitments relating to education and young people.