HMRC has published an update to its guidance “Charging and reclaiming VAT on goods and services related to private school fees”, a document first issued in October 2024 ahead of the 1 January 2025 removal of the VAT exemption for independent schools.
The latest version answers a long-running question for bursars and advisers: whether input tax incurred before a school is compelled to register can be recovered. HMRC has now confirmed that pre-registration VAT on qualifying purchases – including professional fees, refurbishment work and other costs directly attributable to taxable supplies of education and boarding – may be reclaimed in the first VAT return, subject to the normal four-year cap and evidence requirements.
The update emphasises that claims must be restricted where costs also support exempt “closely related” supplies (such as catering or transport), using the partial-exemption and non-business apportionments familiar to charities. HMRC reiterates that the £90,000 registration threshold applies to taxable income only, and that capital items over £250,000 may fall within the Capital Goods Scheme.
With many schools finalising budgets for the 2025/26 academic year, the clarification offers a welcome – if temporary – boost to bottom lines.
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