Families could 'quit the UK' over school VAT exemptions

Fees were expected to skyrocket due to the impending removal of private school VAT exemptions

Families may leave the UK over a new tax raid on private schools, it was thought. Fees were expected to skyrocket due to the impending removal of private school VAT exemptions.

Parents were said to be looking at options abroad - but while it was an "attractive option", Russell Gous, the Editor-in-Chief of TopMoneyCompare warned it could have further financial implications.

"Relocation costs will fluctuate depending on exchange rates," he said. "Exchange markets are notoriously volatile, and a weakening of the pound could dramatically increase the cost of moving abroad."

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He continued: “Additionally, transferring money overseas comes with fees, especially for large sums, so it’s important these families plan their transfers carefully. They also need to be fully aware of the complexities around dual tax residency and how exchange rates could impact the value of their taxable income. For families looking to escape higher education costs in the UK, they may find that the costs of moving abroad outweigh any money they might save on school fees.”

According to The Express, a Saltus Wealth Index Report poll revealed 1 in 10 wealthy families were considering it - despite it seeming like an extreme step. Although there was speculation that the policy could be delayed, the Treasury minister James Murray was unmoved.

The timeline was still in place for the policy to come into force on January 1, 2025, he said while speaking in a Westminster Hall debate on Tuesday. According to The Guardian, he said: “A number of members today have asked why we are introducing this policy in January 2025. The reason for doing so is simple. We want to raise the funding we need as soon as possible to deliver our education priorities for state schools across the country.”

The government said the 20 per cent VAT rate on school fees was planned to raise money for 6,500 new teachers, along with better mental health support for children and funding for breakfast clubs at all primary schools.

Mr Murray said: “To help fund these improvements to our state schools, we have made the tough but necessary decision to end tax breaks for private schools. We expect most private schools will be able to absorb a significant proportion of this new VAT charge to keep fee increases affordable for most parents.”