Private school VAT changes: what parents need to know about the legal challenge

The policy, which aims to fund improvements in state schools, has sparked concern among families and schools. Critics say the move could significantly impact smaller schools, especially those catering to children with special educational needs and disabilities (SEND) or offering specialist arts and faith-based education.

Julie Robinson, Chief Executive of the ISC, said the challenge is about “defending the rights of families who have chosen independent education but may no longer be able to do so as a direct result of VAT on their fees.”

What does the government say?

Labour’s VAT policy on private school fees is designed to generate additional funding for state education. Chancellor Rachel Reeves announced during the Budget that the revenue would support teacher recruitment, free school breakfasts, and mental health provisions in schools.

“Ninety-four per cent of children in the UK attend state schools,” Reeves said. “To provide the highest quality of support and teaching that they deserve, we will introduce VAT on private school fees.”

The policy is expected to raise around £1.7 billion annually by 2030. However, the Office for Budget Responsibility warns it could force around 35,000 pupils out of private schools and into the state system, potentially increasing pressure on state-funded education.

How will this affect families?

Private schools have warned that the policy will drive up fees, making education in the independent sector unaffordable for many. This is particularly concerning for:

• Families of SEND children: Many parents turn to private schools for tailored education that state schools may not provide. A rise in fees could force these families to seek alternatives, which may not meet their children’s needs.
• Specialist schools: Smaller schools focused on arts, faith-based learning, or single-sex education may struggle to absorb additional costs without passing them on to parents.

The ISC has argued that for many families, there is no viable alternative in the state sector, especially for children requiring specific support or specialist education.

What is the legal challenge about?

The ISC’s legal challenge, led by prominent barrister Lord David Pannick KC, aims to secure a judicial review of the VAT policy. The case will argue that:

• The policy breaches the European Convention on Human Rights, including the right to education and the prohibition of discrimination.
• It fails to account for the impact on families who rely on private schooling due to gaps in state provision, particularly for SEND children.

The ISC also hopes to delay the implementation of the VAT charges and work with the government on mitigating its effects.

What happens next?

The government plans to remove private schools’ business rates relief in April 2025, further increasing costs for independent schools. In the meantime, the ISC is calling for discussions to explore ways to reduce the policy's impact on smaller and specialist schools.

If the legal challenge proceeds, the outcome could reshape the education landscape, potentially influencing future government policies on funding and taxation in the sector.

For parents, the VAT changes could bring significant challenges, particularly for those whose children rely on independent schools for specialist education. The ISC’s legal challenge reflects wider concerns about the policy’s potential consequences, from rising costs to increased strain on the state sector.

Families should stay informed about the legal developments and any changes to school fees as the case unfolds.

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