Q&A: VAT treatment changes on income earned by private schools

After months of speculation media commentary and a general election the Treasury and HMRC published details of the plan to impose VAT on private school fees on 29 July 2024. This was a surprise both in terms of its timing and some of the content.

Private schools will be required to pay VAT to HMRC from 1 January 2025. The VAT payable may include payments received by the school from 29 July 2024.

Why are there two dates?

Private education will be subject to VAT from 1 January 2025. The normal tax point rules should be observed by a VAT registered private school from that date with the time of supply typically fixed by the earlier of receipt of payment or the issue of a tax invoice.

Any fees invoiced or paid on or after 29 July which relate to terms beginning after 1 January 2025 will...