Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has received representations over the timing of her Department's consultation on Applying VAT to Private School Fees and Removing the Business Rates Charitable Rates Relief for Private Schools.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
This change 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 school. For example, in England, where attendance at that private school 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. In Northern Ireland, it will be the Education Authority who fund placements in private schools and will be able to reclaim the VAT.
If parents have chosen to pay the fees to place their child in a private school while going through an EHC needs assessment, they will be liable for any fees. As part of the EHC assessment process, the LA will consider what school or college to name on the plan. LAs aim to process all EHCP applications in time for the start of the next school year so that parents can make an informed decision as to which school they send their child to. In certain circumstances, the LA is able to prepay one term’s fees if the EHCP is not yet complete, but the outcome is foreseeable. Likewise, some private schools will forgo the first term’s fees for pupils that are expected to be granted an EHCP in the future.
A technical consultation was published on 29 July and remained open until 15 September. This gave schools 6 weeks to prepare a consultation response, including around 2 weeks from the end of the school holidays. It is important that the consultation closed on 15 September to provide enough time to analyse responses and consider any changes to the draft legislation ahead of Budget.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will take steps to exempt pupils awaiting an Education Health and Care Plan from the introduction of VAT on independent school fees.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
This change 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 school. For example, in England, where attendance at that private school 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. In Northern Ireland, it will be the Education Authority who fund placements in private schools and will be able to reclaim the VAT.
If parents have chosen to pay the fees to place their child in a private school while going through an EHC needs assessment, they will be liable for any fees. As part of the EHC assessment process, the LA will consider what school or college to name on the plan. LAs aim to process all EHCP applications in time for the start of the next school year so that parents can make an informed decision as to which school they send their child to. In certain circumstances, the LA is able to prepay one term’s fees if the EHCP is not yet complete, but the outcome is foreseeable. Likewise, some private schools will forgo the first term’s fees for pupils that are expected to be granted an EHCP in the future.
A technical consultation was published on 29 July and remained open until 15 September. This gave schools 6 weeks to prepare a consultation response, including around 2 weeks from the end of the school holidays. It is important that the consultation closed on 15 September to provide enough time to analyse responses and consider any changes to the draft legislation ahead of Budget.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an estimate of the maximum number of pupils that could move from independent to state schools for there to be a net increase in revenues to the Exchequer arising from her policy on levying VAT on independent school fees.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
Specialist Post-16 Institutions (SPIs) offer a unique mix of education, health, and social care services. The Treasury is working with the Department for Education and the SPI sector to establish the future VAT treatment of these institutions. This will be communicated when the Government confirms the introduction of this policy at Budget.
Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget in the usual way.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether specialist post-16 institutions will be exempt from VAT.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
Specialist Post-16 Institutions (SPIs) offer a unique mix of education, health, and social care services. The Treasury is working with the Department for Education and the SPI sector to establish the future VAT treatment of these institutions. This will be communicated when the Government confirms the introduction of this policy at Budget.
Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget in the usual way.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the imposition of VAT on independent school fees on the number of children who are home schooled.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
The Government does not expect fees to go up by 20% as a result of this policy change, and the Government expects private schools to take steps to minimise fee increases.
Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget in the usual way.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether her Department is providing the Office for Budget Responsibility with input assumptions on (a) the price elasticity of demand for independent sector education and (b) the number of children likely to move to state sector schools as a result of the imposition of VAT on independent schools.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
The Government will confirm the introduction of these tax policy changes at the Budget on 30 October. Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget in the usual way.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate she has made of the average annual cost to independent schools of proposed changes in business rates.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July 2024, the Government announced that eligibility for business rates charitable rate relief will be removed from private schools in England.
The increased business rates liability will vary from school to school and will be determined by their underlying Rateable Value, set by the Valuation Office Agency independently of central government. The government will confirm the introduction of these tax policy changes at the Budget, at which point the Office for Budget Responsibility (OBR) will certify the government’s costings and impact analysis for these measures.
This was a tough but necessary decision that will help to secure additional funding to support the delivery of the Government’s commitments relating to education and young people, including opening 3,000 new nurseries, rolling out breakfast clubs to all primary schools, and recruiting 6,500 new teachers.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will publish guidance for independent schools on (a) VAT registration and (b) operation of the new system for VAT on school fees.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government recognises that, for many private schools, this will be the first time they have needed to register for VAT.
The government is committed to supporting these schools to ensure that the registration process is as smooth as possible for them, and to ensuring they have the necessary support in order to be able to correctly charge VAT and remit it to HMRC.
Ahead of 1 January 2025, HMRC will be:
- publishing bespoke guidance products on GOV.UK
- updating registration systems, and
- putting additional resource in place to help process applications.
HMRC will also be contacting private schools directly to provide information about support sessions.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what resources her Department plans to provide HMRC to support independent schools become VAT registered by 1 January 2025.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government recognises that, for many private schools, this will be the first time they have needed to register for VAT.
The government is committed to supporting these schools to ensure that the registration process is as smooth as possible for them, and to ensuring they have the necessary support in order to be able to correctly charge VAT and remit it to HMRC.
Ahead of 1 January 2025, HMRC will be:
- publishing bespoke guidance products on GOV.UK
- updating registration systems, and
- putting additional resource in place to help process applications.
HMRC will also be contacting private schools directly to provide information about support sessions.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has carried out an equality impact assessment of proposed tax changes on independent schools.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The Government is committed to breaking down barriers to opportunity, ensuring every child has access to high-quality education, which is why we have made the tough decision to end tax breaks for private schools. This will raise revenue for essential public services, including investing in the state education system
This VAT change will not impact pupils with most acute additional needs where these can only be met in private schools, as determined by an Education and Health Care Plan in England, and equivalent processes in other nations.
Where pupils are placed in a private school because their needs cannot be met in the state sector, and they have their places funded by their Local Authority, the Local Authority will be able to reclaim the VAT they incur on these pupils’ fees. In Northern Ireland, it will be the Education Authority who fund placements in private schools and will be able to reclaim the VAT in this way.
The government will publish a Tax Information and Impact Note setting out the impacts of the changes, including the equalities impacts, alongside the Finance Bill.