The 29 July 2024 saw the Chancellor of the Exchequer , Rachel Reeves announcing the next steps and draft legislation on the new Governments tax commitments ahead of the full Budget, which is now due to be held on 30 October 2024. Below are details of the 2 main announcements that may affect you!
Private school fees and boarding services will no longer be exempt from VAT
The Chancellor announced that as of 1 January 2025, all education services and vocational training supplied by a private school will be subject to VAT at 20% . Boarding services provided by a private school will also be subject to VAT at 20%.
Even though this is with effect from 1 January 2025, it was announced that fees invoiced or paid after 29 July 2024 that relate to the school terms after 1 January 2025 will be subject to the standard rate of VAT.
The government have confirmed these changes will not impact pupils with the most acute special education needs, where their needs can only be met in private schools.
Abolishing the Furnished Holiday Lettings tax regime
This was previously announced with the objective being to align the tax rules for furnished holiday lettings with those of other property businesses.
The measure will have effect:
- On or after 6 April 2025 for Income Tax and for Capital Gains Tax
- From 1 April 2025 for Corporation Tax
The changes will remove the tax advantages that current furnished holiday let landlords have received over other property businesses in 4 key areas by:
- Applying the finance costs restrictions rules so that mortgage interest will be restricted to basic rate for Income Tax
- Removing capital allowances rules for new expenditure
- Withdrawing reliefs from taxes on chargeable gains for trading businesses
- No longer including this income within relevant UK earnings when calculating maximum pension relief.
If you would like any further details, please get in touch.