Education Update June 2026

VAT uncertainty grows for private schools

HMRC is currently considering two decisions that could have a significant VAT impact for VAT‑registered private schools.

The first relates to advance fees paid by parents before 29 July 2024. HMRC is reviewing whether, in certain circumstances, these payments could still be subject to VAT. In particular, where advance payments were taken as a general deposit rather than being allocated to named pupils for specific future terms, HMRC may argue that the VAT tax point arises only when those funds are later allocated. If upheld, this position could bring previously received fees within the scope of VAT.

The second issue concerns whether education and catering services constitute a single supply for VAT purposes. Where meals are compulsory, not separately itemised, and the school presents a single overall price for education and meals, HMRC is considering whether this represents a single standard‑rated supply rather than a mix of exempt education and separate catering.

Both areas remain under review, but private schools should be aware of the potential exposure and consider their current arrangements carefully.

For advice on these issues, including potential mitigation options, please speak to a member of our VAT team by clicking below.

To find out more about our services and how we can help maximise your school’s potential, please visit our website or contact me using the details below.

Darren O'Connor

Partner

T: +44 (0)7990 525362

E: DOconnor@jamescowper.co.uk

The information in this newsletter must not be relied on as giving sufficient advice in any specific case.