Isle of Man ends the VAT exemption for private school fees from 1 January 2025

What changed in detail

The Value Added Tax Act 1996 (Amendment) Order 2025 (SD 2025/0102) was made by the Isle of Man Treasury on 9 April 2025 and approved by Tynwald on 21 May 2025. It removes the VAT exemption for private school fees. Its explanatory note says the change keeps the Island in line with the United Kingdom, as the Customs and Excise Agreement 1979 requires.

The Order inserts a new Part III into Schedule 10 (exempt supplies). Part III lists exceptions to the exemption:

• education provided by a private school;
• vocational training provided by a private school;
• board and lodging closely related to either.

Item 1 does not reach everything a private school teaches. Three supplies stay exempt:

• teaching English as a foreign language;
• education in a nursery class;
• a higher education course.

The remaining supplies are therefore standard-rated at 20%. The Order defines “private school” and treats certain supplies made through a connected body as made by the school.

The Order came into operation the day after it was made, but articles 3 and 4 are deemed to have come into operation on 30 October 2024. They apply to education, vocational training and board and lodging falling on or after 1 January 2025, whenever the supply is treated as taking place. The Order relies on the Treasury’s power to make retrospective provision that matches UK law, and the matching UK order took effect on 30 October 2024.

Article 4 adds an anti-forestalling charge. It covers fees received on or after 29 July 2024 and before 30 October 2024 for provision on or after 1 January 2025, treating them as supplied on the later of 1 January 2025 and the start of the term. It does not apply to schools approved under section 20 of the Education Act 2001 (special education).

What it means

The change is in force and mirrors the UK. Prepaying fees before the change did not avoid the VAT: fees received from 29 July 2024 up to 29 October 2024 for terms from January 2025 are caught by the anti-forestalling rule, unless the school is approved under section 20 of the Education Act 2001. English as a foreign language, nursery classes and higher education courses stay exempt. The Order was made in April 2025 but reaches back to January 2025, so the legal basis for VAT on early-2025 fees comes from its retrospective effect. No later Manx order reversing it appears in this record set as of November 2026. The broader Isle of Man VAT position is in the country guide.