The UK's wealthiest private schools collected over 500m last year through pre-payment schemes to avoid a 20% VAT on fees. Tax experts indicated that HMRC plans to investigate these schemes for compliance, noting that parents might face VAT liabilities in the future. Some legal disputes could arise with noted schools like Winchester and Eton. A government source confirmed the expectation that the removal of tax breaks for private schools could generate significant revenue by 2029-30, improving state school standards and recruitment of teachers.
The UK's wealthiest private schools took in 500m last year through fee in advance schemes. Parents sought to avoid a 20% VAT added to school fees.
Tax experts say HMRC will scrutinise these schemes to check specific details such as set prices. Parents could face VAT demands in the future.
Dan Neidle mentioned that many schools used fee in advance schemes like a deposit, which may not work from a VAT perspective.
The government aims to remove tax breaks for private schools, expecting to raise 1.8bn a year by 2029-30, aiding teacher recruitment and state school standards.
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