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.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the VAT treatment for SEND therapies provided to independent school pupils will be after 1 January 2025 where (a) the therapy is provided by the school and (b) the therapy is provided by an external provider.
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.
All institutions that meet the definition of a private school set out in the draft legislation are within scope of this policy. The draft legislation can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1f8a3c2a28abb50d8c1/Private_Schools_Draft_Legislation_-_DIGITAL.pdf
This definition includes music schools, dance schools, Centres for Advanced Training, and tuition centres where they charge fees for full-time education for pupils of compulsory school age. Institutions that charge fees for full-time education suitable for people over compulsory school age but under 19 (such as sixth forms) are also within scope of this policy.
All education services, vocational training, and boarding services provided by institutions that meet this definition of a private school will be subject to VAT, including extracurricular classes. The VAT treatment of Special Educational Needs therapies will depend on the type of therapy and who it is provided by. If the therapy is a means of supporting the education delivered to and is provided by the private school, it will likely be subject to VAT. If it is a type of therapy that qualifies for the health and social care VAT exemptions (for instance, occupational therapy), it will remain exempt from VAT. This policy does not affect the VAT treatment of services provided by an unconnected third-party who carries out their services on a private school’s premises.
The full fees of pupils in receipt of funding through the Music and Dance Scheme will be subject to VAT. The right time to consider any changes to schemes such as the Music and Dance Scheme is at the Spending Review.
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.
Further details on this policy can be found in the technical note published alongside the legislation. The technical note can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1bdce1fd0da7b592eb6/Technical_Note_-_DIGITAL.pdf
HMRC will also be publishing bespoke guidance for schools, and holding support sessions to help them understand their liabilities as a VAT-registered business.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether families in receipt of funding for attending a specialist school through the Music and Dance Scheme will be exempt from paying VAT on the remainder of those 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.
All institutions that meet the definition of a private school set out in the draft legislation are within scope of this policy. The draft legislation can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1f8a3c2a28abb50d8c1/Private_Schools_Draft_Legislation_-_DIGITAL.pdf
This definition includes music schools, dance schools, Centres for Advanced Training, and tuition centres where they charge fees for full-time education for pupils of compulsory school age. Institutions that charge fees for full-time education suitable for people over compulsory school age but under 19 (such as sixth forms) are also within scope of this policy.
All education services, vocational training, and boarding services provided by institutions that meet this definition of a private school will be subject to VAT, including extracurricular classes. The VAT treatment of Special Educational Needs therapies will depend on the type of therapy and who it is provided by. If the therapy is a means of supporting the education delivered to and is provided by the private school, it will likely be subject to VAT. If it is a type of therapy that qualifies for the health and social care VAT exemptions (for instance, occupational therapy), it will remain exempt from VAT. This policy does not affect the VAT treatment of services provided by an unconnected third-party who carries out their services on a private school’s premises.
The full fees of pupils in receipt of funding through the Music and Dance Scheme will be subject to VAT. The right time to consider any changes to schemes such as the Music and Dance Scheme is at the Spending Review.
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.
Further details on this policy can be found in the technical note published alongside the legislation. The technical note can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1bdce1fd0da7b592eb6/Technical_Note_-_DIGITAL.pdf
HMRC will also be publishing bespoke guidance for schools, and holding support sessions to help them understand their liabilities as a VAT-registered business.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether (a) music schools, (b) dance schools and (c) Centres for Advanced Training will be exempt from VAT after January 2025.
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.
All institutions that meet the definition of a private school set out in the draft legislation are within scope of this policy. The draft legislation can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1f8a3c2a28abb50d8c1/Private_Schools_Draft_Legislation_-_DIGITAL.pdf
This definition includes music schools, dance schools, Centres for Advanced Training, and tuition centres where they charge fees for full-time education for pupils of compulsory school age. Institutions that charge fees for full-time education suitable for people over compulsory school age but under 19 (such as sixth forms) are also within scope of this policy.
All education services, vocational training, and boarding services provided by institutions that meet this definition of a private school will be subject to VAT, including extracurricular classes. The VAT treatment of Special Educational Needs therapies will depend on the type of therapy and who it is provided by. If the therapy is a means of supporting the education delivered to and is provided by the private school, it will likely be subject to VAT. If it is a type of therapy that qualifies for the health and social care VAT exemptions (for instance, occupational therapy), it will remain exempt from VAT. This policy does not affect the VAT treatment of services provided by an unconnected third-party who carries out their services on a private school’s premises.
The full fees of pupils in receipt of funding through the Music and Dance Scheme will be subject to VAT. The right time to consider any changes to schemes such as the Music and Dance Scheme is at the Spending Review.
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.
Further details on this policy can be found in the technical note published alongside the legislation. The technical note can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1bdce1fd0da7b592eb6/Technical_Note_-_DIGITAL.pdf
HMRC will also be publishing bespoke guidance for schools, and holding support sessions to help them understand their liabilities as a VAT-registered business.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the average time was for an organisation to become VAT registered with HMRC in the last 12 months.
Answered by James Murray - Exchequer Secretary (HM Treasury)
In the last 12 months, from 1 August 2023 to 31 July 2024, the average time for an organisation to receive a decision on their VAT registration application was 14 working days.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what communications she plans to issue to smaller independent schools on the proposed application of VAT to private 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, if she will make an assessment of the potential impact of imposing 20% VAT on school fees on exports.
Answered by James Murray - Exchequer Secretary (HM Treasury)
As the Chancellor announced on 29 July, as of 1 January 2025, all education services and vocational training supplied by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. Boarding services closely related to such a supply will also be subject to VAT at 20%. Any fees paid from 29 July 2024 pertaining 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 rates relief.
The government will confirm the introduction of these tax changes at Budget. A Tax Information and Impact Note will be published alongside the Finance Bill once the independent Office for Budget Responsibility have scrutinised and certified the impacts of the final policy.