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VAT will now apply to school fees - what do schools do first?

on Wednesday, 30 October 2024.

1 January 2025 is only seven working weeks away. This is a big change for schools and our advice remains that your first step should be to prepare a VAT implementation plan.

All schools are different so it is worth taking the time to ensure any plan is tailored to your individual setting. This should not only include your list of operational tasks but governance and risk management tasks too.

Where do you start?

We are often asked what schools should do first - there is a temptation to leap straight into calculating how you can reclaim your input VAT. Our view is that the following need to be dealt with immediately:

  • For those schools who are not yet registered, registering for VAT
  • Ensure your finance system is MTD compliant
  • Analyse income

We recommend focusing on income first as there are essential questions to consider around single/multiple supply, possible business/non-business apportionment and the associated tax coding. These tasks will need to be actioned as soon as possible to ensure the Spring/Lent Term invoicing process happens smoothly.

Of course there is also the question of how your fee invoices will look in the new VAT world, as well as the requirement to publish a VAT inclusive fee from 1 January 2025. Once this is done, move on to the next steps in the plan to make sure you are ready to submit your first VAT return next year.

Is this a job for lawyers?

This is a change in the law and the risk of non-compliance falls to individual schools.

Luckily, there is a wealth of guidance available in the sector right now, in addition to the guidance notes issued by the Treasury and webinars and advice starting to emerge from HMRC.

One of the joys of the independent school sector is that each school is unique - this means each school should consider their own individual position, risk assess their VAT compliance and militantly record decisions on VAT treatment of individual supplies.

There is significant value in the template guidance available but you may find the appropriate VAT treatment for your school does not fit with what your neighbouring schools are doing.

Since September, we have been extremely busy helping schools prepare for VAT with simple bespoke tools to succinctly navigate the changes as well as individually mentoring schools through the necessary implementation steps.

The law is changing - it is worth a check-in with your legal advisors on what the change in law may mean. As you will be aware by now, VWV have assembled a multi-disciplinary taskforce of lawyers, accountants and school advisors to help guide schools through this implementation period.

Bespoke. Simple. Succinct.


For more information, please contact Susie Luckman in our Independent Schools team on 07468 698 972, or complete the form below.