In the Budget speech The Chancellor of the Exchequer has confirmed that the government will remove the VAT exemption for private schools from 1 January 2025.
For families claiming the Continuity of Education Allowance (CEA) this is likely to increase private school fees.
To minimise the impact of this change, the Secretary of State has directed that the CEA rate cap will be uprated, to ensure it continues to pay up to 90% of school fees for eligible claimants.
What does this mean for CEA claimants?
The CEA scheme recognises the enormous sacrifices our military families make and aims to minimise the disruption to their children’s education caused by Service commitments involving frequent moves of the family home.
The government remains committed to improving service life and renewing the nation’s contract with those who serve and their families. Whilst the new VAT policy does not offer any exemptions, the government is committed to monitoring how these changes affect military families, with any potential adjustments to the scheme being considered during the next Spending Review.
To protect the integrity of the allowance the Secretary of State has directed that the cap on the current rates is uprated, and CEA rates are recalculated to take into account the addition of VAT. This will ensure the MOD continues to pay up to 90% of private school fees following the taxation changes.
Whilst the CEA cap uprating will provide some protection from fee changes as a result of the VAT exemption being lifted, the parental contribution may also increase in schools choose to pass this on. Some claimants may need to consider this before the policy takes effect.
If you need to change your child’s school due to affordability, contact the Pay and Allowances Casework and Complaints Cell (PACCC) via DBSMilPers-MilOps-PACCC-Group@mod.gov.uk. You can also contact the Educational Advisory Team UK (EAT UK) via rc-dcs-hq-eat@mod.gov.uk if you require specific educational advice regarding your child.
CEA Rates Adjustment
The CEA rates are influenced by pricing adjustments made by the UK education sector. The rates are calculated on an annual basis using the range of school fees, most used by the Service personnel claiming the allowance. The MOD’s reassessment of rates will allow claims paid in December to reflect the new CEA rates ahead of any school fee increases from January 2025.
The annual CEA rating cycle for the academic year 25-26 will still be conducted in August 2025 in advance of the beginning of the new academic year in September 2025.
The single Services will be issuing further communications about the changes to CEA claimants today.
Point of Contact:
Armed Forces Remuneration: People-AFRem-AllcesGroup@mod.gov.uk