- VAT on Private School Fees: Starting from 30 October 2024, school and boarding fees for terms beginning on or after 1 January 2025 will be subject to the standard VAT rate of 20%. VAT applies to all payments received for educational services, including external bursaries.
- Supply Classification: When providing education, bundled goods and services (like meals or transport) are treated as a single supply for VAT purposes, generally subject to one VAT treatment. However, separate charges for ancillary services may be treated as distinct supplies, potentially with different VAT rates.
- Reclaiming VAT: Private schools can reclaim VAT incurred on goods and services used for taxable supplies, but not on exempt supplies. Schools must calculate reclaimable VAT through a partial exemption method, as they typically provide both taxable and exempt services.
- Grant Payments and Bursaries: VAT liability on grant payments depends on their nature; block grants are usually exempt, while specific pupil grants make the entire fee subject to VAT. Similarly, VAT applies to bursary payments that contribute to a student’s fees.
- Exemptions for Certain Services: Nursery classes primarily for children below compulsory school age are exempt from VAT. Additionally, extra-curricular activities that are educational are taxable, while childcare services, such as after-school clubs, remain exempt.
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Source gov.uk
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