The Government has announced it will apply 20 per cent VAT to private school fees across the UK from January 2025.
We know some Army families have concerns about how this change might affect their children’s education.
A public consultation was open during the summer, and AFF submitted Army families’ evidence about the impact VAT on private schools will have on Service children.
Your evidence helped us to submit a detailed consultation response sharing your views.
The Government has now responded to the consultation and there are no exemptions for Armed Forces personnel and Service children.
The MOD has conducted an in-year recalculation of Continuity of Education Allowance (CEA) rates for January 2025. While it is helpful to have confirmation that CEA has increased in response to the application of VAT to private school fees, we know that this recalculation will mean that the minimum 10 per cent parental contribution will also need to increase.
The Government has stated it will be monitoring how these changes affect military families, with any potential adjustments to the scheme being considered during the next Spending Review.
We do not know how it will be monitored at this stage, but AFF will continue raise all your questions with the MOD and press for answers.
Will Army families be exempt from paying VAT?
No, there are no exemptions for Service personnel and their children from paying VAT on private school fees.
The Government has responded to the technical consultation and stated that the “MOD will increase the funding allocated Continuity of Education Allowance (CEA) to account for the impact of any private school fee increases on the proportion of fees covered by the CEA.
“5.20 The Government greatly values the contribution of our diplomatic staff and serving military personnel. The CEA provides clearly defined financial support to ensure that the need for frequent mobility, which often involves an overseas posting, does not interfere with the education of their children. Ahead of the VAT policy coming into effect on 1 January, the Ministry of Defence (MoD) and the Foreign, Commonwealth and Development Office (FCDO) will increase the funding allocated to the CEA to account for the impact of any private school fee increases on the proportion of fees covered by the CEA in line with how the allowance normally operates. The MoD and FCDO will set out further details shortly.”
A full copy of the Government response can be found here – Government Response to the Technical Note on Applying VAT to Private School Fees and Removing the Business Rates Charitable Rate Relief
My children are at a state boarding school, will they be exempt?
Education and boarding provided by state schools will be exempt from VAT.
2.12 Education and boarding provided by state schools (including academies) are not affected by this policy change, meaning they will continue to be exempt from VAT. This reflects the fact that state schools and academies will continue to be ‘eligible bodies’.
I am claiming Continuity of Education Allowance, will this increase?
Continuity of Education Allowance (CEA) is reviewed annually by the MOD, normally around 1 August each year. When the MOD calculates the rate, it looks at the average fee increases across a percentage of schools, to help determine how much CEA will increase that year.
The MOD has now conducted an in-year calculation of CEA with the addition of VAT included and published a directed letter including new CEA rates.
Are state boarding schools included in the recalculation, as they are exempt from VAT?
There are no changes to the calculation method and state boarding schools have been included in this in-year recalculation.
The MOD has said that further consideration will be given before the next annual rate review in August.
When are the new rates effective from?
The rates are effective from 1 December 2024, meaning that claims for the spring term 2025 onwards will be on the new rates.
If you have already submitted your spring term claim prior to 1 December, then the system will automatically update the new rates.
How much are the new CEA rates?
The increase for the Senior Boarding rate is 12.46% and Junior Boarding rate is 16.57%. Download new published rates.
Will the increase in CEA rates cover all the extra VAT?
Army families claiming CEA at a private school must make a 10 per cent minimum parental contribution to school fees. The recalculation does mean that the parental contribution will also need to increase, therefore this will not cover all the increased costs for Army families. We know families may be facing higher bills for next term’s school fees and would ask Army families to email us and let us know how they are impacted following the recalculation of CEA on moneysupport@aff.org.uk
What if I cannot afford the increase in costs?
The MOD has advised that those who cannot afford costs and wish to change school due to affordability, can contact the Pay and Allowances Casework and Complaints Cell (PACCC) – DBSMilPers-MilOps-PACCC-Group@mod.gov.uk.
AFF recognises that this may not be a desired option for Service children to move school and for those already in critical exam years this may not be possible.
If you are affected, please contact us at moneysupport@aff.org.uk
What is AFF doing?
We have been raising your concerns with the MOD and working with organisations like the Independent Schools Council, the Boarding Schools’ Association and the other families federations to highlight the importance of a stable educational experience for Service children, and the role independent schools can play in this.
AFF made a formal a submission to the consultation about the impact this policy will have on some Army families.
We also used your evidence and wrote to the House of Lords to highlight the unique challenges this policy will have on Army families to inform their debate on 5 September.
We are continuing to raise all your questions and concerns to the MOD and will ensure any impact on Army families is monitored.
We would encourage Army families to let us know the impact that will have on them – please email moneysupport@aff.org.uk and let us know how this will affect you.
MOD
The MOD has released Frequently Asked Questions.
A message from the Deputy Chief of the General Staff, Lt Gen David Eastman to CEA claimants
You will have seen the release of the re-calculated rates for Continuity of Education Allowance, which have recently been published by the MOD. The increased rates have been calculated by Defence to attend to the anticipated rise in fees, using modelling of the boarding costs from both Public and State boarding schools – noting that different schools are transferring different increases. The Army spends in excess of £80M per annum on Continuity of Education Allowance. This is more than it does on Longer Separated Service and the Local Overseas Allowance (our other two biggest allowance spends).
Whilst it is welcome, I recognise that for some claimants these re-calculated rates might not go far enough. The Army’s survey to understand the impact and sentiment surrounding the Government’s introduction of VAT to Public Schools enabled us to champion the necessity of the rate rise. That work ensured that Defence continues to contribute a significant amount towards school fees (up to 90% in some cases). I think that we should celebrate our ability to continue to make that offer and in my role as the Army’s Principal People Officer, I continually advocate and fight for the interest of our people on areas like Continuity of Education Allowance. My team in the Personnel Directorate will continue to assess the impact that this policy is having on claimants, in order to keep Defence and our Ministers informed, as necessary on your behalf.
Finally, I encourage you to read the FAQ which I believe capture many of your likely questions. If you require further support and advice, please engage with your RAO/G1/J1 teams. Alternatively, the Pay and Allowances Casework and Complaints Cell (PACCC) can be contacted here: DBSMilPers-MilOps-PACCC-Group@mod.gov.uk. If you require specific educational advice, you can also contact the Educational Advisory Team UK (EAT UK) via rc-dcs-hq-eat@mod.gov.uk.
POSTED ON 31 OCTOBER 2024
UPDATED ON 6 DECEMBER 2024
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Comments
I feels quite unfair on military families that the military rate and calculation of CEA is different to the FCDO who reimburse up to £16k of fees per term and ask for no parental contribution if their fees are below the ceiling……
Can you help. We have 2 children who are SEN registered. We have placed them in a Private school in Ware, Hertfordshire.
I left the Army 6 years ago. My wife is a serving officer stationed in Bassingbourne.
We placed both children into Private school because the local council
couldn’t support us.
Please, Is there any help that we can get from the MOD on the VAT increase.
This is disappointing not least as many military are paying for private education without help from CEA as for various reasons they are not eligible.
For those that are, 10% of a higher amount will still need to be found (and in many cases it’s much higher than 10% too).
I wonder if Private schools will offer some kind of discount, we’re in the same position as we don’t meet the criteria. One child’s school offer 20% discount and the other zero. I thought schools were entitled to funding from MOD (separate to CEA) if they educate an armed forces child but any enquiry has been met with a “no”.