Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the answer of 9 September 2024 to Question 4047 on Private Education: Fees and Charges, whether the Tax Information and Impact Note will differentiate between (a) mainstream and special provision and (b) primary, secondary and sixth form phases.
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.
Any fees paid from 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. Furthermore, where a school in England has charitable status, the Government will legislate to remove their eligibility to business rates charitable rate relief. This is intended to take effect from April 2025, subject to Parliamentary passage.
A technical note setting out the details of these two tax policies has been published online here:
Draft VAT legislation was also published alongside this technical note, forming a technical consultation, which closed on 15 September. As part of this technical consultation, the Government engaged with a broad range of stakeholders.
Whilst developing these policies, the Government has carefully considered the impact that they will have on pupils and their families across both the state and private sector, as well as the impact they will have on state and private schools. Following scrutiny of the Government's costings by the independent Office for Budget Responsibility (OBR), details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget on 30 October in a Tax Information and Impact Note.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the answer of 9 September 2024 to Question 4047 on Private Education: Fees and Charges, whether the Tax Information and Impact Note will include a (a) reasonable worst case scenario and (b) central planning estimate.
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.
Any fees paid from 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. Furthermore, where a school in England has charitable status, the Government will legislate to remove their eligibility to business rates charitable rate relief. This is intended to take effect from April 2025, subject to Parliamentary passage.
A technical note setting out the details of these two tax policies has been published online here:
Draft VAT legislation was also published alongside this technical note, forming a technical consultation, which closed on 15 September. As part of this technical consultation, the Government engaged with a broad range of stakeholders.
Whilst developing these policies, the Government has carefully considered the impact that they will have on pupils and their families across both the state and private sector, as well as the impact they will have on state and private schools. Following scrutiny of the Government's costings by the independent Office for Budget Responsibility (OBR), details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget on 30 October in a Tax Information and Impact Note.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the answer of 9 September 2024 to Question 4047 on Private Education: Fees and Charges, whether she plans to conduct primary research for the Tax Information and Impact Note; and which secondary sources she will use for that Note.
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.
Any fees paid from 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. Furthermore, where a school in England has charitable status, the Government will legislate to remove their eligibility to business rates charitable rate relief. This is intended to take effect from April 2025, subject to Parliamentary passage.
A technical note setting out the details of these two tax policies has been published online here:
Draft VAT legislation was also published alongside this technical note, forming a technical consultation, which closed on 15 September. As part of this technical consultation, the Government engaged with a broad range of stakeholders.
Whilst developing these policies, the Government has carefully considered the impact that they will have on pupils and their families across both the state and private sector, as well as the impact they will have on state and private schools. Following scrutiny of the Government's costings by the independent Office for Budget Responsibility (OBR), details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget on 30 October in a Tax Information and Impact Note.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the answer of 9 September 2024 to Question 4047 on Private Education: Fees and Charges, whether the Tax Information and Impact Note will include estimated effects (a) at January 2025, (b) at September 2025 and (c) over the long term.
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.
Any fees paid from 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. Furthermore, where a school in England has charitable status, the Government will legislate to remove their eligibility to business rates charitable rate relief. This is intended to take effect from April 2025, subject to Parliamentary passage.
A technical note setting out the details of these two tax policies has been published online here:
Draft VAT legislation was also published alongside this technical note, forming a technical consultation, which closed on 15 September. As part of this technical consultation, the Government engaged with a broad range of stakeholders.
Whilst developing these policies, the Government has carefully considered the impact that they will have on pupils and their families across both the state and private sector, as well as the impact they will have on state and private schools. Following scrutiny of the Government's costings by the independent Office for Budget Responsibility (OBR), details of the Government’s assessment of the expected impacts of these policy changes will be published at the Budget on 30 October in a Tax Information and Impact Note.
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.