If child aged 5 is in a private school nursery their whole class will face 20% tax, says HMRC, overturning Treasury exemption promise
Entire nursery classes will be drawn into Labour’s policy of charging VAT on private school fees despite the Government’s intention to exempt them,
“We are hugely concerned about the stipulation in the new HMRC guidance that if a nursery class contains even one child of compulsory school age, fees for that whole nursery class are subject to VAT. There are around 300 private schools with less than 150 children, according to the ISC’s 2024 census, but data is not shared on how many offer mixed-age classes.
“These decisions need to be made in the best interests of individual children and not be impacted by financial considerations or how it could impact other families in a pre-school setting. She described the tax as a “travesty” as there would only be two five-year-olds in the class by the end of the school year but the entire class would be subject to VAT. This means it would no longer be feasible to offer a foundation stage at the school.
“If that’s the case consistently then that’s going to become quite unsustainable for us,” Ms Hare said. “It leaves me very nervous.” Neil Roskilly, who ran the Independent Schools Association from 2010 to 2021 and now advises schools, called the nursery tax “draconian”.it is “difficult to tell” exactly how many schools, children and parents will be impacted by VAT on nursery classes, but said it is likely to be another hit on small independent schools that “often combine year groups” due to staffing ratios in early years.
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