Changing private schools’ VAT status: What would it actually mean?

The Labour Party has proposed to remove the VAT exemption for private school fees, which has raised questions about how this change would be implemented. Currently, fee-paying and non-fee-paying schools are treated differently under the UK VAT regime. State-administered schools receive government funding and are not considered ‘in business’ for VAT purposes, while private schools are exempt from VAT but cannot recover it. This proposal would mark a significant VAT event as it would be the first major difference in legislation between the UK and EU VAT regimes.

Source Grant Thornton

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