A Sky News article published on 1 January 2025 claimed that “Labour on Wednesday scrapped the VAT exemption and business rates relief for private schools”.
This is not correct. While the highly-publicised and long-promised removal of the Value Added Tax (VAT) exemption on private school fees took effect on 1 January 2025, there’s been no change to the business rates relief rules for private schools, as this policy relies on separate legislation.
The government expects most private schools in England with charity status to lose their charitable business rates relief in April 2025, subject to parliamentary approval.
Media organisations should ensure their reporting is accurate, and correct errors when they occur. Since we contacted Sky News, a correction has been made to its article, and we’re grateful for this swift action.
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Private school VAT changes
Until 1 January 2025, private schools were among the eligible bodies that provided education and were consequently exempt from VAT. It is now charged on private school education and boarding fees at the standard rate of 20%. This also applies to fees paid from 29 July 2024 “relating to the term starting in January 2025 and onwards”.
This change was legislated for after the Autumn Budget in October 2024. While the relevant Finance Bill has not yet achieved Royal Assent and become law, the Treasury confirmed to Full Fact that the policy has been implemented through a Budget resolution, which allows provisional tax changes to take effect.
What’s happening with business rates?
Around half of England’s private schools have charitable status. Charities can claim up to 80% relief on business rates.
In November 2024, the government introduced the Non-Domestic Rating (Multipliers and Private Schools) Bill, that would remove the eligibility of private schools in England for charitable business rates relief—though it wouldn’t remove a school’s charitable status itself, and some may retain their charitable relief if they are “wholly or mainly concerned with the provision of education to children with an Education, Health and Care Plan”.
The government has said that this would take effect from April 2025, subject to parliamentary approval.
You can read more about these policies in our Government Tracker.