In a representation to government, the Institute recommended a delay to 1 August 2025, and cautioned that many independent schools will need to register for VAT by 1 January 2025. This will place unnecessary strain on HMRC and fail to give schools enough time to seek professional advice regarding their registration.
Bringing the change in to apply to school terms starting on or after 1 August 2025 would give more time to ensure the draft legislation works as intended, ICAEW said.
ICAEW said that schools which are not VAT-registered are unlikely to have accounting systems that comply with the tax, and may need to update them before January. It also warned that the short timeframe for such a project could lead to poor VAT compliance in the early months following the change.
ICAEW added that the definition of a private school currently included in the draft legislation could unintentionally catch some institutions, like nursery schools, sixth form colleges and universities, that should be outside the charge, and so recommended that the wording be tightened.
Ed Saltmarsh, ICAEW Technical Manager, VAT and Customs, said:
“This is a significant change, and schools need more time to prepare to ensure any issues are ironed out. The rush to apply VAT to private school fees doesn’t allow sufficient time to consider all the possible consequences, such as the other institutions that could unintentionally fall inside the legislation, and it also places an unnecessary burden on HMRC.
“Introducing VAT on private school fees at the start of the next academic year would give schools, parents and HMRC the breathing space to ensure the implementation is effective.”
ENDS
Notes to editors:
CONTACT: ICAEW media office stephen.froome@icaew.com or 07970 402 073
- An ICAEW factsheet on private schools and VAT is available.