VAT on Education: What Is Exempt and What Is Not

Education is exempt from VAT when an eligible body supplies it, under Schedule 9 Group 6 of the Value Added Tax Act 1994. Private school fees are the exception: they have been standard-rated at 20% for supplies made on or after 1 January 2025. Private tuition by an independent teacher in a subject ordinarily taught in a school or university remains exempt and was not affected by that change.

That last sentence is the one most readers arrive here needing, and almost nobody says it plainly. The January 2025 reform was reported as "VAT on education". It was not. It was VAT on one kind of supplier. Everything below sets out which supplies moved, which did not, and what each position costs the provider making it.

The VAT exemption education providers rely on, before and after

VAT is charged on taxable supplies. A supply is not taxable if it is exempt, and the exemptions are listed in Schedule 9 of the Value Added Tax Act 1994, with section 31 of the Act being the provision that gives the Schedule its effect. Group 6 of that Schedule is the education group. Item 1 exempts the provision by an eligible body of education and vocational training. Item 2 exempts private tuition by an individual teacher. Those two items carry almost the whole of education VAT between them, and they are independent of one another.

The mechanics of exemption as a concept, including how it differs from zero-rating and what it does to input tax, sit on our VAT exemption page. The short version needed here is that an exempt supply carries no output VAT and also blocks recovery of the VAT on the costs behind it, whereas a zero-rated supply is a taxable supply at 0% and preserves recovery. That distinction becomes the whole story for a school whose fees have just become taxable.

What Finance Act 2025 did

Finance Act 2025 did not rewrite Group 6. It did something structurally neater and, for readers, more confusing: it added a new layer on top of the Schedule.

The Act inserted a new Part 3 (Exceptions) into Schedule 9 and amended section 31(1) so that a supply is exempt only if it is of a description specified in Part 2 of Schedule 9 and is not of a description specified in Part 3. Part 2 is where the familiar groups live. Part 3 is a short list of things pulled back out of them.

So Group 6 item 1 still says what it always said. The exemption it grants is now read subject to Part 3, and Part 3 takes three things out:

• Education provided by a private school.
• Vocational training provided by a private school.
• Board and lodging closely related to either of those.

Three things were expressly preserved and remain exempt:

• English as a foreign language.
• Nursery classes.
• Higher education courses.

The result is that private school fees and boarding fees are standard-rated at 20% on supplies made on or after 1 January 2025. We cite the Act rather than a policy summary throughout this page, because the statutory definition of "private school" and the precise wording of Part 3 are the parts most likely to decide a borderline case, and they should be read in the original. We do not reproduce either here.

What Part 3 removes, and what it preserves

It is worth being exact about the shape of the exception, because a great deal of commentary describes it as "VAT on schools" and leaves readers guessing about everything adjacent.

The exception is defined by who supplies and what is supplied. It reaches education and vocational training supplied by a private school, and it reaches board and lodging that is closely related to that education. Closely related is what pulls boarding in: boarding is not analysed as a separate exempt supply of accommodation sitting alongside a taxable supply of teaching. It follows the teaching.

The preserved carve-outs are not accidents. A private school that runs a nursery class keeps the exemption on that class. A provider running an English as a foreign language course is not caught. Higher education courses are outside the exception. The preservation is specific to the exception, which means the ordinary Group 6 analysis still applies to those supplies: they are exempt because they were left alone, not because they are exempt by some separate rule.

What the exception does not do is any of the following. It does not touch item 2, the private tuition exemption. It does not touch the welfare exemption in Group 7 that registered childcare runs on. It does not touch state schools, which do not supply education for consideration in the relevant sense to begin with. And it does not create a new tax on parents as such: the VAT is the school's output tax on its supply, which is why the anti-forestalling rule had to be written around the school's invoicing rather than around the parent's bank account.

Exempt education against standard-rated education

This is the table to read if you read nothing else. Each row pairs a real trade situation with its closest taxable neighbour.

Exempt: no VAT charged	Standard-rated at 20%
A self-employed maths tutor teaching GCSE lessons personally	The same tutor's lessons delivered by tutors she engages, or billed through her limited company
An Ofsted-registered nursery's childcare fees, exempt as welfare under Group 7	An independent school's termly fees, for terms from 1 January 2025
A private school's nursery class fees, a preserved carve-out	That same school's boarding fees, closely related to the taxable education
An English as a foreign language course, a preserved carve-out	A private school's vocational training courses
A university's higher education courses, a preserved carve-out	A hobby or non-curriculum coaching course sold by an individual

Read down the two columns and the organising principle falls out. After January 2025 the deciding question for a fee-charging provider is what kind of body is supplying it, not whether the activity looks like teaching. The same GCSE maths lesson is exempt from a sole-trader tutor, exempt from a state school, taxable from a private school, and taxable from the tutor's own limited company. The lesson is identical in all four. The supplier is not.

The dates, in sequence

More providers have got the dates wrong than have got the principle wrong, because the commencement and the anti-forestalling rule run on different clocks. Set them out in order:

1. 29 July 2024. The anti-forestalling charge in Finance Act 2025 section 48 catches prepayments of private school fees made on or after this date. It is the earliest date that matters.
2. 30 October 2024. Per section 49, sections 47 and 48 are treated as having come into force on this date.
3. 1 January 2025. The provisions have effect for supplies made on or after this date. This is the date the standard rate bites on ordinary termly fees.

The anti-forestalling rule then has two limbs, and the limb that applies depends on when the fee was invoiced or paid:

• Fees invoiced or paid from 30 October 2024 for a term starting on or after 1 January 2025 are taxed at the time of the invoice or payment.
• Fees invoiced or paid between 29 July 2024 and 29 October 2024 for such a term are taxed on the first day of that term.

The practical effect is that a parent who paid three years of fees in advance in August 2024 did not escape the tax. The supply for those future terms is taxed on the first day of each term. A school that took such payments and treated them as exempt at the time has a correction to make, not a planning success to defend. The sections are 47 (removal of the exemption for private school fees), 48 (charge on pre-paid private school fees) and 49 (commencement), and they are worth reading in the Act rather than in summary.

Private tuition is still exempt

This is the part of the page that exists because the rest of the internet does not say it. The private tuition exemption was not changed in January 2025. If you are a self-employed tutor and you have been told you now have to charge VAT, that advice is wrong unless something else about your practice has changed.

The exemption is in VATA 1994 Schedule 9 Group 6 item 2, and it reads, in terms:

"the supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer"

Three conditions sit inside that sentence and all three must hold. They are cumulative, not alternatives.

1. An individual acting independently

The supplier must be an individual, acting independently of an employer. HMRC's published guidance in VAT Notice 701/30 reads this as a sole proprietor or a member of a partnership. A teacher employed by a school and paid through PAYE is not acting independently in respect of that employment, though the same person tutoring privately in the evenings on their own account is.

2. A subject ordinarily taught in a school or university

The subject must be one ordinarily or regularly taught in a number of schools or universities. Conventional academic and curriculum subjects qualify without difficulty: maths, the sciences, English, modern languages, history, music as an academic and practical school subject. The test is about what schools and universities generally teach, not about what one institution happens to offer. Hobby and non-curriculum coaching sits outside it, and that is a real boundary rather than a technicality: a sole trader teaching A-level physics is exempt, and the same person teaching a weekend course in something schools do not teach is making a standard-rated supply.

3. Delivered personally

The teaching must be delivered personally by the individual whose exemption it is. This is the condition that most often breaks when a tutoring practice grows.

The exclusions

Three things fall outside item 2 and are standard-rated:

• Tuition delivered by employees or engaged tutors. Where a tutor takes on others to assist, the tuition the tutor personally delivers as sole proprietor or partner may still qualify as exempt private tuition, but the tuition others deliver is standard-rated. The practice apportions, or treats the whole of it as standard-rated.
• Tuition in a non-school subject, per condition 2 above.
• Tuition supplied through a limited company. Treat this as standard-rated. The statutory hook is an "individual teacher", and a company is not an individual, so on the face of the provision the exemption does not read across. We flag this one honestly: HMRC does not state the company exclusion in those terms in its published guidance, and the position above follows from the wording of item 2 and from the separate list of eligible bodies rather than from an express HMRC statement. If you tutor through a company and the amounts are material, take advice on your own facts before you either charge VAT or do not.

One further boundary is genuinely open and we will not guess at it. Online and pre-recorded tuition is not settled by the material we rely on. The question is whether the supply is still tuition delivered personally by the individual, which live one-to-one teaching plainly can be and a pre-recorded course library plainly is not, with a good deal of ground in between. Check the current position on gov.uk's education and vocational training guidance before you settle the treatment of a recorded or platform-delivered offering.

If you tutor for a living, the tax picture around the VAT position is on our accountant for tutors page.

Nurseries and childcare: the welfare route, not the education route

Nurseries are the second group who assumed the January 2025 change had swept them up, and it had not, because most of them were never relying on the education exemption in the first place.

Childcare supplied by an Ofsted-registered provider is exempt as a welfare service under VATA 1994 Schedule 9 Group 7 item 9, as services directly connected with the care or protection of children. Registration with the relevant regulator is what makes the provider state-regulated, which is the condition the welfare exemption turns on. Nothing in Part 3 of Schedule 9 touches Group 7.

There is a timing risk worth planning around. A provider is treated as state-regulated once its registration has been approved, which means supplies made while an application is still pending do not obviously sit inside the exemption. A new setting that opens on a provisional basis and bills parents before the registration comes through should look at that period specifically rather than assuming the exemption runs from the first day of trading. We are stating this as a timing risk rather than a settled rule and deliberately not citing a paragraph number for it: check the live welfare services and goods guidance on gov.uk for the current wording before relying on it.

Two related points. A private school's nursery class is exempt through the preserved carve-out in the education group, so a school with a nursery has a split position: exempt nursery classes, standard-rated main school fees. And a nursery that makes taxable supplies alongside its exempt childcare, for example consumables sold to parents or room hire outside session hours, is a partly exempt business. The wider picture for a fee-charging setting is on our accountants for nurseries page.

This page addresses privately run, fee-charging providers, independent schools and self-employed tutors. Charity and committee-run preschools, academy trusts and anything requiring an audit or regularity assurance engagement sit outside what is covered here and need their own specialist analysis.

What exemption costs a provider

Exemption sounds like a benefit and is frequently a cost. Three consequences follow from making exempt supplies, and providers reliably notice the first, welcome the third and forget the second.

No output VAT. You charge nothing on the fee. For a provider selling to parents, who cannot recover VAT, this is a genuine price advantage worth 20%.

No input tax recovery. The VAT on costs attributable to the exempt supply is not recoverable. It is not deferred, it is not carried forward, it is simply a cost that sits in your profit and loss account alongside the net amount. For a provider with premises, equipment, software and professional fees, that is a real number every year.

Exempt turnover is outside the registration test. Exempt supplies are not taxable turnover, so they never count toward the £90,000 rolling 12-month registration threshold. A provider whose income is wholly exempt has no duty to register however large it becomes. Where a provider has both exempt and standard-rated income, only the standard-rated slice is measured. The mechanics of that test are on our VAT registration threshold page.

A provider with both exempt and taxable supplies is into partial exemption, where the exempt input tax may still be recoverable in full if it falls under the de minimis limit: not more than £625 a month on average, which is £1,875 a quarter or £7,500 a year, and not more than half of all input tax in the period. Both conditions must be met, and there are two different 50% tests in this area that are routinely conflated. The full treatment, including the standard method and the simplified tests, is on our VAT exemption page, and once you are registered the practical side of getting the figures onto a return is covered in how to complete and submit a VAT return.

Worked example: an independent school charging £5,400 a term

An independent day school charges £5,400 a term per pupil. Assume that figure is the VAT-exclusive fee the school intends to receive, which is the assumption to state explicitly because schools took different commercial decisions about whether to pass the tax on in full.

For a term starting on or after 1 January 2025, that supply is standard-rated. VAT at 20% is £1,080, giving a VAT-inclusive fee of £6,480. Where the school instead decided to absorb some of the tax and hold the headline fee at £5,400 including VAT, the VAT element is one sixth of £5,400, which is £900, and the school retains £4,500 net. Those two decisions look similar on a fee schedule and are £1,080 apart per pupil per term in the school's own income.

Boarding follows. A boarding charge is closely related board and lodging and is standard-rated on the same terms, which materially increases the cash effect for a boarding school compared with a day school.

Now the other half, which schools consistently underestimate. A school that makes standard-rated supplies is making taxable supplies. It is registrable, and input tax attributable to those taxable supplies becomes recoverable where it previously was not. That covers ordinary running costs and, potentially, VAT on significant capital projects. How much comes back, over what period and by what method depends on the school's full mix of supplies, because a school with exempt nursery classes and an exempt EFL programme alongside its taxable main school fees is partly exempt and needs an attribution method. We are not quantifying that recovery here and no page should. The point to take away is directional: the cost of the change to a school is the output tax less the input tax that has just become available, and modelling only the first half overstates it.

The wider compliance position for a fee-charging school is covered on our accountant for schools page.

Worked example: a sole-trader tutor billing £34,000

A sole-trader tutor bills £34,000 a year for A-level and GCSE lessons in maths and physics, all of which she teaches herself.

Every condition of item 2 is satisfied: she is an individual acting independently, the subjects are ordinarily taught in schools and universities, and she delivers the lessons personally. The whole £34,000 is exempt. She charges no VAT. She recovers no VAT on her costs, so the VAT on her laptop, her subject software subscriptions and her professional fees is a real cost to her. And none of the £34,000 counts toward the £90,000 registration threshold, so she has no registration duty and would gain nothing by volunteering for one.

Now vary it. The practice grows, and she engages two other tutors who bill £18,000 between them for lessons they deliver. That £18,000 fails the personal delivery condition. It is standard-rated.

Her position is now split. £34,000 exempt, £18,000 taxable. The rolling 12-month registration test runs on the £18,000 alone, not on the £52,000 total, so she remains comfortably below £90,000 and has no duty to register yet. But the number to watch has changed: it is the engaged-tutor slice that grows toward the threshold, and a practice that doubles its associate work twice is there. She is also now a partly exempt business the moment she registers, with an attribution exercise to run on her shared costs.

One more variation, because it catches people. If she incorporates and bills the lessons she personally teaches through a limited company, the exemption is at risk on the whole of it, because the statutory hook is an individual teacher. That is a point to settle before incorporating, not after, and it is a reason a tutoring practice can be a poor candidate for incorporation even where the income tax arithmetic looks attractive.

What people get wrong

These are the errors that actually show up, in rough order of frequency.

Assuming tutors lost the exemption in January 2025. They did not. This is the single most common error on this topic, and it leads sole traders to register for VAT they do not owe and to add 20% to lesson prices for no reason. The exception bites on private schools. Schedule 9 Group 6 item 2 is untouched.

Assuming the change hit nurseries. It did not. Nursery classes are a preserved carve-out of the exception, and standalone registered childcare was never in the education group to begin with: it runs on the welfare exemption in Group 7.

Missing the anti-forestalling dates. Treating a lump sum paid in August 2024 for future terms as exempt because it was paid before January 2025 is wrong. Section 48 reaches prepayments from 29 July 2024, and the two timing limbs decide when the tax point falls.

Assuming a tutor operating through a limited company keeps the exemption. The hook is an "individual teacher". Do not assume it survives incorporation, and do not assume the answer without advice either, because HMRC has not stated the company position in terms.

Forgetting that a school that becomes taxable also becomes able to recover input tax. Modelling the change as 20% of fee income, with nothing on the other side, overstates it.

Assuming exempt fee income counts toward the £90,000 threshold. It does not. Exempt supplies are not taxable turnover. Only the standard-rated slice is tested.

Treating school-related extras as automatically following the fees. Uniform, trips, wraparound care and lettings are separate supplies with their own analysis, and this page does not settle them. Look at each one on its own terms and check the current gov.uk guidance for the type of supply involved.

Where to go next

• VAT exemption explained, including partial exemption, the de minimis limit and the full list of Schedule 9 groups.
• Zero-rated VAT, and why zero-rating is worth more to a supplier than exemption.
• The £90,000 VAT registration threshold, and why exempt turnover sits outside it.
• How to complete and submit a VAT return.
• Accountant for schools, for a fee-charging school's wider compliance position.
• Accountants for nurseries, for funded hours, welfare exemption and staffing costs.
• Accountant for tutors, for the trading allowance, registration triggers and platform reporting.

If your position sits on one of the boundaries above, particularly a tutoring practice that has started engaging other tutors or a school working out its recovery method, that is a calculation on your own figures rather than a rule you can read off a page. Get it modelled before the first return rather than after it.