In this year’s autumn budget, The Chancellor Rachel Reeves announced a number of changes that will have a significant impact on private schools. And whilst many think of private schools as expensive, elite establishments that can afford these increased costs, what does this mean for smaller independent specialist schools, including SEN and faith schools?

There are currently around 2,500 private schools in the UK which provide education to 7% of all school age children.

The first major change that was announced is the removal of business rates relief that many private schools currently benefit from. This change will come into effect on 1 April 2025 and will effectively mean that private schools that are charities will no longer be eligible to claim charitable rates relief (80%) and will be required to pay the full business rates liability.  For business rates, ‘private schools’ are defined as schools where full-time education is provided for pupils of compulsory school age where fees are payable.

The second major change is the imposition of VAT on school fees. From 1 January 2025 the standard rate of 20% will be added to private school fees.

Philip Waite, head of Alternatives at Sanderson Weatherall said, “The introduction of VAT on school fees will have a disproportionate effect on smaller independent schools, including specialist schools like those providing special educational needs and faith education.

“Some schools have already suggested that the financial and administrative burden these changes will have on them will lead to significant financial difficulties and forced closures.

“And where schools fail, this will reduce the VAT income for the Government to reinvest in the state system, whilst putting greater pressure on the state system in terms of capacity.”

We have a specialist team at Sanderson Weatherall who can support private schools through these changes. Providing estates strategy and business rates advice, we can ensure schools aren’t overpaying in terms of business rates liability, and also guide schools through ownership changes, with avoiding disruption to education being the top priority.