Education Funding and Private Schools
The government has announced a two-pronged approach to increase funding for education, particularly benefiting state schools:
- VAT on Private School Fees: From January 2025, a 20% VAT will be imposed on fees charged by private schools.
- Removal of Business Rates Relief for Private Schools: Starting from April 2025, private schools in England will lose charitable rate relief.
These measures are estimated to generate £1.8 billion annually by 2029-30, which will be directed towards state education. Exceptions will be made for private schools ‘wholly or mainly’ catering to students with Education, Health, and Care Plans (EHCPs). Schools across the SEND sector should take advice, to review scope for potential mitigation and exemption of rates assessments.
Business Rates Relief and Reform
To support businesses, the government has introduced the following measures:
- Retail, Hospitality, and Leisure (RHL) Relief: For 2025-26, eligible RHL properties will receive a 40% discount on business rates, capped at £110,000 per business.
- Small Business Multiplier Freeze: The small business multiplier will remain at 49.9p for 2025-26, while the standard multiplier will increase to 55.5p.
- Sectoral Multipliers: The government plans to introduce sectoral multipliers, potentially affecting businesses with higher rateable values.
- Business Rates Reform: A discussion paper has been published to initiate a dialogue on reforming the business rates system.
- Business Rates Transparency: The Valuation Office Agency (VOA) has released a summary of responses to the March 2023 consultation on increasing transparency in business rates valuations.
These measures aim to balance the need for increased education funding with support for businesses, particularly those in the retail, hospitality, and leisure sectors, although are particularly controversial within the education sector.
For more information and how the changes affect your business, please contact our team.
