The government admits that Labour's VAT plans for private schools may drive some parents away from the sector.
UK to charge VAT on school fees by January as key infrastructure projects cancelled.
Rachel Reeves revealed on Monday that they will begin charging VAT on private schools on January 1, 2025.
Treasury documents released following the Chancellor's speech reinforced ministers' expectations that the new 20% tax will push some private school parents away.
"The Government recognises that these policy changes may lead to increased costs for some parents and carers, and that some pupils may subsequently move into the state education sector," said the press release.
It is the first time Labour has admitted in writing that the VAT changes will make private education costly for certain families.
The Treasury insisted it would have a minimal impact on state schools, and that classrooms would have enough space to accommodate extra private school pupils.
It said local authorities would provide help for families priced out by the VAT hit, and that âthe Government understands that moving schools can be challengingâ.
Hereâs what you need to knowâŚ
1. VAT changes from January 2025
2. âRetrospectiveâ VAT on pre-paid fees (It means any advance fees paid from today will be taxed. The government will legislate âwith retrospective effectâ.)
3. âConnected bodiesâ also chargedâŚ
Other organisations could be hit if they provide âeducation or vocational training at a private schoolâ.
4. 20% fee hike ânot expectedâ
5. Legislation coming in the autumn
Following a consultation, ending on September 15, on the VAT legislation, government âmay make technical amendmentsâŚto ensure that it works as intendedâ
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