The Government has taken a number of decisions on tax to stabilise the public finances and support public services. Ending tax breaks for private schools will raise £1.8bn a year.

To raise school standards for every child, and break down the barriers to opportunity, the government will increase the core schools budget by £2.0bn in real terms over this Spending Review (2023-24 to 2028-29). This provides a £4.7bn cash increase per year by 2028-29 (compared to 2025-26), which ensures average real terms growth of 1.1% a year per pupil.

A private school, or any other business, making taxable supplies under the threshold has no requirement to register for VAT. Once the value of taxable supplies made exceeds the VAT registration threshold, which currently stands at £90,000, they must register for VAT.

On 1 January 2025 supplies of education by private schools become subject to VAT at the standard rate of 20%. These fees must be included with the value of all other taxable supplies in calculating taxable turnover.

If the taxable turnover of a private school now exceeds the threshold, either due to supplies of education alone or a mix of education with other taxable supplies, they must register for VAT. This requirement extends to any person over the threshold and to taxable supplies of any nature.

The change in legislation and new guidance applies only to supplies of education by a private school and does not affect other taxable supplies.

Taxpayers who are required to register for VAT can usually do so online.

The ‘Business activity’ section of the VAT registration form requires a full description of all the taxpayer’s business activities, including the type of goods and/or services that they supply. HMRC guidance is for private schools to enter ‘Private Education Provider’ in this section.

When registering for VAT, taxpayers are also required to provide Standard Industry Classification (SIC) codes that best describe their business activities. These will depend on their individual circumstances.

Performing arts schools that offer full-time education to children of compulsory school age and/or 16-19 year olds for a charge are in scope of the application of VAT to private school fees. This is to ensure fairness and consistency across all schools that provide education services and vocational training for a charge. It is the government’s position, therefore, that carving these schools out of the policy would be unfair to other private schools.

The Department for Education provides means-tested bursaries for eligible families as part of the Music and Dance Scheme (MDS) if their child has a place at any one of eight MDS performing arts private schools. For this academic year 2024/25, lower income families will receive additional support to ensure the total cost of their parental contributions do not rise from January 2025 as a result of the VAT change. This means that almost half of eligible families will be receiving further support in addition to the bursary already provided.

As part of the MDS, the Department also provides a grant to the Choir Schools Association (CSA) for their Choir Schools Scholarship Scheme. This scheme provides means-tested support to choristers attending CSA member schools. Whether member schools charge VAT from 1 January 2025 on their education fee will vary, depending on whether schools are private or state-funded.

Performing arts schools that offer full-time education to children of compulsory school age and/or 16-19 year olds for a charge are in scope of the application of VAT to private school fees. This is to ensure fairness and consistency across all schools that provide education services and vocational training for a charge. It is the government’s position, therefore, that carving these schools out of the policy would be unfair to other private schools.

The Department for Education provides means-tested bursaries for eligible families as part of the Music and Dance Scheme (MDS) if their child has a place at any one of eight MDS performing arts private schools. For this academic year 2024/25, lower income families will receive additional support to ensure the total cost of their parental contributions do not rise from January 2025 as a result of the VAT change. This means that almost half of eligible families will be receiving further support in addition to the bursary already provided.

As part of the MDS, the Department also provides a grant to the Choir Schools Association (CSA) for their Choir Schools Scholarship Scheme. This scheme provides means-tested support to choristers attending CSA member schools. Whether member schools charge VAT from 1 January 2025 on their education fee will vary, depending on whether schools are private or state-funded.

Performing arts schools that offer full-time education to children of compulsory school age and/or 16-19 year olds for a charge are in scope of the application of VAT to private school fees. This is to ensure fairness and consistency across all schools that provide education services and vocational training for a charge. It is the government’s position, therefore, that carving these schools out of the policy would be unfair to other private schools.

The Department for Education provides means-tested bursaries for eligible families as part of the Music and Dance Scheme (MDS) if their child has a place at any one of eight MDS performing arts private schools. For this academic year 2024/25, lower income families will receive additional support to ensure the total cost of their parental contributions do not rise from January 2025 as a result of the VAT change. This means that almost half of eligible families will be receiving further support in addition to the bursary already provided.

As part of the MDS, the Department also provides a grant to the Choir Schools Association (CSA) for their Choir Schools Scholarship Scheme. This scheme provides means-tested support to choristers attending CSA member schools. Whether member schools charge VAT from 1 January 2025 on their education fee will vary, depending on whether schools are private or state-funded.

The Bill sets out that where a private school is wholly or mainly concerned with providing education for pupils with an Education, Health and Care plan they will be exempt from the measure and therefore retain eligibility for business rates charitable relief. The wholly or mainly test is one which is common across various parts of business rates and local authorities are accustomed to applying it. Wholly or mainly is generally taken to mean 50% or more.

HM Treasury (HMT) is responsible for VAT policy and publishing the impacts of the policy.

HMT has published an assessment of the impacts of removing the VAT exemption that applied to private school fees. This can be accessed at: https://www.gov.uk/government/publications/vat-on-private-school-fees/ac8c20ce-4824-462d-b206-26a567724643#who-is-likely-to-be-affected.

Additionally, HMT published policy costings for applying the standard rate of VAT to private schools alongside the Autumn Budget 2024 on 30 October, which can be found here: https://assets.publishing.service.gov.uk/media/6721d2c54da1c0d41942a8d2/Policy_Costing_Document_-_Autumn_Budget_2024.pdf.

As the impact assessment publication sets out, the government estimates that only a very small minority of private school pupils (6%) will move and that most school moves will occur at natural transition points, which will reduce overall disruption. Longer term impacts on this group may be lessened by revenue raised by this measure being used to help the 94% of children who attend state schools, including over one million children with special educational needs and disabilities (SEND).

There is no separate assessment by SEND. It is important to note that pupils who need a local authority-funded place in a private school will not be impacted by the changes. To protect pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees.

HM Treasury (HMT) is responsible for VAT policy. HMT has published its assessment of the impacts of removing the VAT exemption that applied to private school fees, which can be found here: https://www.gov.uk/government/publications/vat-on-private-school-fees/ac8c20ce-4824-462d-b206-26a567724643#who-is-likely-to-be-affected.

This overall assessment considers but does not provide a breakdown of impacts by region or pupil characteristics, including special educational needs and age. The government predicts that, in the long-run steady state, there will be 37,000 fewer pupils in the private sector in the UK as a result of the removal of the VAT exemption applied to school fees. This represents around 6% of the current private school population. This movement is expected to take place over several years. Of this number, the government estimates an increase of 35,000 pupils in the state sector in the steady state following the VAT policy taking effect, with the other 2,000 consisting of international pupils who do not move into the UK state system, and domestic pupils moving into homeschooling. This state sector increase represents less than 0.5% of total UK state school pupils, of which there are over 9 million. The government expects the revenue costs of pupils entering the state sector in England to steadily increase to a peak of around £300 million per annum after several years.

The impact on individual local authorities will interact with other pressures and vary. Local authorities have a statutory duty to provide full-time education for all children of statutory school age in their area, suitable for their age, aptitude, ability and any special educational needs and/or disabilities.

The department works with local authorities to help them fulfil their duty to secure school places. Requirements for state-funded places for children that would have attended a private school will be addressed in each local authority through normal processes.

HM Treasury (HMT) is responsible for VAT policy. HMT has published its assessment of the impacts of removing the VAT exemption that applied to private school fees, which can be found here: https://www.gov.uk/government/publications/vat-on-private-school-fees/ac8c20ce-4824-462d-b206-26a567724643#who-is-likely-to-be-affected.

This overall assessment considers but does not provide a breakdown of impacts by region or pupil characteristics, including special educational needs and age. The government predicts that, in the long-run steady state, there will be 37,000 fewer pupils in the private sector in the UK as a result of the removal of the VAT exemption applied to school fees. This represents around 6% of the current private school population. This movement is expected to take place over several years. Of this number, the government estimates an increase of 35,000 pupils in the state sector in the steady state following the VAT policy taking effect, with the other 2,000 consisting of international pupils who do not move into the UK state system, and domestic pupils moving into homeschooling. This state sector increase represents less than 0.5% of total UK state school pupils, of which there are over 9 million. The government expects the revenue costs of pupils entering the state sector in England to steadily increase to a peak of around £300 million per annum after several years.

The impact on individual local authorities will interact with other pressures and vary. Local authorities have a statutory duty to provide full-time education for all children of statutory school age in their area, suitable for their age, aptitude, ability and any special educational needs and/or disabilities.

The department works with local authorities to help them fulfil their duty to secure school places. Requirements for state-funded places for children that would have attended a private school will be addressed in each local authority through normal processes.

HM Treasury (HMT) is responsible for VAT policy. HMT has published its assessment of the impacts of removing the VAT exemption that applied to private school fees, which can be found here: https://www.gov.uk/government/publications/vat-on-private-school-fees/ac8c20ce-4824-462d-b206-26a567724643#who-is-likely-to-be-affected.

This overall assessment considers but does not provide a breakdown of impacts by region or pupil characteristics, including special educational needs and age. The government predicts that, in the long-run steady state, there will be 37,000 fewer pupils in the private sector in the UK as a result of the removal of the VAT exemption applied to school fees. This represents around 6% of the current private school population. This movement is expected to take place over several years. Of this number, the government estimates an increase of 35,000 pupils in the state sector in the steady state following the VAT policy taking effect, with the other 2,000 consisting of international pupils who do not move into the UK state system, and domestic pupils moving into homeschooling. This state sector increase represents less than 0.5% of total UK state school pupils, of which there are over 9 million. The government expects the revenue costs of pupils entering the state sector in England to steadily increase to a peak of around £300 million per annum after several years.

The impact on individual local authorities will interact with other pressures and vary. Local authorities have a statutory duty to provide full-time education for all children of statutory school age in their area, suitable for their age, aptitude, ability and any special educational needs and/or disabilities.

The department works with local authorities to help them fulfil their duty to secure school places. Requirements for state-funded places for children that would have attended a private school will be addressed in each local authority through normal processes.

HM Treasury (HMT) is responsible for VAT policy. HMT has published its assessment of the impacts of removing the VAT exemption that applied to private school fees, which can be found here: https://www.gov.uk/government/publications/vat-on-private-school-fees/ac8c20ce-4824-462d-b206-26a567724643#who-is-likely-to-be-affected.

This overall assessment considers but does not provide a breakdown of impacts by region or pupil characteristics, including special educational needs and age. The government predicts that, in the long-run steady state, there will be 37,000 fewer pupils in the private sector in the UK as a result of the removal of the VAT exemption applied to school fees. This represents around 6% of the current private school population. This movement is expected to take place over several years. Of this number, the government estimates an increase of 35,000 pupils in the state sector in the steady state following the VAT policy taking effect, with the other 2,000 consisting of international pupils who do not move into the UK state system, and domestic pupils moving into homeschooling. This state sector increase represents less than 0.5% of total UK state school pupils, of which there are over 9 million. The government expects the revenue costs of pupils entering the state sector in England to steadily increase to a peak of around £300 million per annum after several years.

The impact on individual local authorities will interact with other pressures and vary. Local authorities have a statutory duty to provide full-time education for all children of statutory school age in their area, suitable for their age, aptitude, ability and any special educational needs and/or disabilities.

The department works with local authorities to help them fulfil their duty to secure school places. Requirements for state-funded places for children that would have attended a private school will be addressed in each local authority through normal processes.

On 29 July 2024, the Government published a technical note confirming that the Government will remove private schools’ eligibility for charitable rates relief under business rates in England.

The Ministry for Housing, Communities and Local Government will bring forward primary legislation to amend the Local Government Finance Act 1988 to end relief eligibility for private schools. The change is intended to take effect from April 2025, subject to Parliamentary process.

As set out in the technical note, the Government recognises some pupils have special educational needs that can only be met in a private school. The Government has made clear that it will consider how to address the potential impact of these changes in cases where private school provision has been specified for pupils through an Education, Health and Care Plan

As education is a devolved matter, the department only holds this information for schools in England. The department publishes annual figures on the number of pupils in different types of schools in England, which is accessible at: https://explore-education-statistics.service.gov.uk/find-statistics/school-pupils-and-their-characteristics/2022-23.

Additionally, the department publishes data which shows the number of pupils in state-funded primary and secondary schools in each local authority from January 2016 to January 2023, which is accessible here: https://explore-education-statistics.service.gov.uk/data-tables/permalink/b8a00d3a-301f-4997-e472-08dc32b112d8.

The publication does not distinguish between primary and secondary independent schools. However, a broad definition based on the age range of the pupils catered for can be applied.

The department has also published data showing the ages of pupils at independent schools in each local authority from January 2016 to January 2023, which is available at: https://explore-education-statistics.service.gov.uk/data-tables/permalink/04f0b5e2-a007-4817-e471-08dc32b112d8. To note, pupils aged between four and ten are usually in primary school and pupils aged between eleven and nineteen are usually in secondary school.

Prior to 2016, the department published the number of pupils by local authority and phase of school but this did not include the breakdown by pupil age. Data showing the total number of pupils in state-funded primary and secondary schools and independent schools in each local authority is accessible at: https://www.gov.uk/government/collections/statistics-school-and-pupil-numbers. This data does not allow for age breakdowns to be used to estimate what proportion of the independent school pupils were primary or secondary age.

As education is a devolved matter, the department only holds this information for schools in England. The department publishes annual figures on the number of pupils in different types of schools in England, which is accessible at: https://explore-education-statistics.service.gov.uk/find-statistics/school-pupils-and-their-characteristics/2022-23.

Additionally, the department publishes data which shows the number of pupils in state-funded primary and secondary schools in each local authority from January 2016 to January 2023, which is accessible here: https://explore-education-statistics.service.gov.uk/data-tables/permalink/b8a00d3a-301f-4997-e472-08dc32b112d8.

The publication does not distinguish between primary and secondary independent schools. However, a broad definition based on the age range of the pupils catered for can be applied.

The department has also published data showing the ages of pupils at independent schools in each local authority from January 2016 to January 2023, which is available at: https://explore-education-statistics.service.gov.uk/data-tables/permalink/04f0b5e2-a007-4817-e471-08dc32b112d8. To note, pupils aged between four and ten are usually in primary school and pupils aged between eleven and nineteen are usually in secondary school.

Prior to 2016, the department published the number of pupils by local authority and phase of school but this did not include the breakdown by pupil age. Data showing the total number of pupils in state-funded primary and secondary schools and independent schools in each local authority is accessible at: https://www.gov.uk/government/collections/statistics-school-and-pupil-numbers. This data does not allow for age breakdowns to be used to estimate what proportion of the independent school pupils were primary or secondary age.