The Labour party has been promising to impose VAT on private school fees for some time and it looks as though this threat is about to be realised. We understand that the change will be implemented relatively quickly (indeed it could be as soon as the first budget, likely to take place in September), possibly with an immediate effect and potentially a backdated element.
Some private schools have already recognised this threat, and started to contact parents in relation to pre-paying next years’ fees in order to avoid the additional VAT charge. This may, indeed, be an effective way to avoid VAT on fees for the next school year, and if you would like to discuss this, or if you have not yet been contacted, please let us know.
In some cases, realising sufficient funds in the current tax year to meet the pre-payment of private school fees may create personal tax charges that outweigh the potential savings. As such, we strongly encourage you to obtain advice before proceeding with any pre-payment.
For more information contact Sian
Sian Armitage is Tax Director at Mark Davies & Associates Ltd