The High Court has upheld the government’s decision to apply VAT to private school fees, marking a significant development for both the independent education sector and state schools.
The judgement, delivered by three judges in June after an April judicial review, dismissed claims that the policy unlawfully infringes upon human rights or disproportionately affects certain groups.
The move is a central component of the current government’s strategy to secure additional funding for state education, but it has prompted renewed debate about its impact on families and the wider sector.
Policy Origins
The policy to end VAT exemption for private school fees was introduced as a key commitment in the Labour Party’s election manifesto. Following the general election, the government acted swiftly. The Chancellor, Rachel Reeves, confirmed in the October
Budget that the standard 20% VAT rate would be applied to private school fees starting from 2025. The Treasury has projected that the measure will generate £460 million in the 2024/25 financial year, increasing to £1.5 billion the year after
Reeves stated that all revenue raised would directly support frontline state education initiatives, including the recruitment of 6,500 teachers and improvements to services for children with special educational needs and disabilities (SEND).
Legal Challenge and Key Arguments
The Independent Schools Council (ISC) responded by launching a judicial review in November, supported by legal counsel including Lord Pannick KC. Claimants contended that the policy contravened the European Convention on Human Rights and the Human Rights Act 1998.
They argued it would most harm lower-income families, faith communities, and those with children requiring special education groups relying heavily on independent provision. One focus was on children with SEND attending independent schools without an education, health and care plan (EHCP).
According to submissions, many such families had little option but to use private schools, given pressures within the EHCP system. The policy was also challenged on grounds of religious freedom, with claimants stating that parents seeking faith-based education could be left without suitable alternatives.
Judgement Details
In the written judgement, the court dismissed the claim in full. The judges recognised that imposing VAT could “interfere” with the right to education but concluded the government was justified in balancing these concerns against its public policy aims.
The decision stated that ministers retain a wide discretion in tax policy and described the measures as proportionate. The court addressed concerns relating to special needs pupils.
While acknowledging potential adverse effects for families without EHCPs, judges found exempting these pupils would substantially reduce the intended revenue and could create incentives for over-diagnosis. They further stressed the need for fairness for the approximately 1.1 million SEND pupils in state schools.
SEND and Religious Claims Considered
Claims of discrimination against faith-based provision were also rejected. Judges concluded that too broad an exemption based on religion might include elite schools with only nominal religious affiliations, which would jeopardise the policy’s effectiveness.
They noted that government language describing the reform as ending a “tax break” was “more a slogan than a legally significant description”, highlighting the distinction between legal and political rhetoric.
Furthermore, the argument that the VAT policy breached pan-European tax norms was dismissed, with the court observing that the UK’s departure from the European Union expanded its legislative freedom in such areas.
Sector Reaction and Practical Implications
The High Court’s decision has reinforced the government’s authority in tax and education matters, but considerable uncertainty remains about how schools and families will be affected in practice
Many independent schools are now reviewing their cost structures, potential bursary offerings, and financial planning. The ISC has cautioned that the policy may have “serious consequences” for both the independent and state sectors.
Concerns persist over whether the changes will influence demand for private schooling or prompt increased movement into the state sector, particularly if affordability becomes a growing issue for families.
Final Summary
The High Court’s verdict on VAT for private school fees marks a pivotal moment for education policy in the UK. By endorsing the government’s approach, the judgement establishes parliamentary authority over tax and education, while leaving open questions about the policy’s lasting impact.
Independent schools and families must now adjust to the new financial landscape, with further debate expected on the longer-term effects for both sectors and the allocation of state school funding.
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