How to plan for VAT on school fees
1. How can parents avoid paying VAT on school fees?
They can’t. Eventually all parents will have to pay the VAT on school fees. But that does not mean parents should not look more closely at their own cash management and careful tax planning. There were many parents that chose not to give schools advance fees and instead have looked at ways to make their cash work harder for them to cover the VAT on school fees.
2. Can I register for VAT now?
Current guidelines say not before 30 October 2024. However, you can still raise your invoices for the Spring 2025 term in December with VAT included even if you are not fully VAT registered.
3. How can I register for VAT?
Details on VAT registration is online an can be found on the GOV.UK website and follows HMRC’s guidelines and processes. You will need various documents before you get started so have everything ready.
4. What do I do if I am already registered for VAT?
This is an involved and complex question that will require the expertise of a VAT specialist. This is because a number of factors will need to be considered, for example:
- Are you in a VAT group or not?
- Do you have a trading subsidiary?
- Do you already apply a partial exemption calculation, and do you understand how this will need to change?
- Are you a day school or a boarding school?
- Are you an all-through school with a nursery provision?
- How many of your children are local authority placements and/or have special educational needs (SEN) requirements?
- Do you know how much of your activity is not related to education?
- Do you understand the impact of awarding bursaries and scholarships?
- Have you evaluated your Capital Projects in relation to the Capital Goods Scheme? (this also applies even if you’re not registered).
NB: Please note that none of these questions are mutually exclusive, and each school will have its own individual VAT profile.
5. How will my systems cope with the introduction of VAT on school fees?
Your system must be compliant with Making Tax Digital and you will need to ensure your invoice templates are updated.
If you require additional support, please contact your usual Moore VAT Specialist.