Private schools lose High Court battle against Starmer's VAT raid on fees

Independent

a day ago

It comes after six families last year launched a legal challenge against the government's controversial tax raid, which imposes 20 per cent VAT on private schools, claiming it is discriminatory against certain children, such as those with special education needs (SEN).
Supported by the Independent Schools Council (ISC), which represents 1,400 independent schools, the families sought a declaration of incompatibility under section 4 of the Human Rights Act, claiming the new tax is incompatible with the European Convention on Human Rights.
But Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain said in a 94-page decision that while the legislation does interfere with some of the group's human rights, there was a 'broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise'.
During a hearing in April, Lord David Pannick KC, representing one group of children and their parents, said that the needs of some children currently in private schools could not be met by state schools.
The High Court was told that, as well as religious beliefs and SEN, some children are privately educated because of a need for a single-sex environment because of previous abuse, or because they are only temporarily in the UK and need to be educated in line with their home national curriculum.
But Sir James Eadie KC, representing the Treasury, HMRC and the Department for Education, said abolishing the VAT exemption for private school fees was a prominent feature of Labour's manifesto at the last general election.
While the legal challenge would not have been able to halt the VAT policy or reverse it even if successful, it would have been a major blow to ministers and piled pressure on them to consider further exemptions.
The government has estimated the tax raid will raise £1.7bn per year by 2029-30, money which ministers said would be used to fund 6,500 new teachers for state schools.
So far, private school pupil numbers have fallen by more than 11,000 in England following the tax hike, DfE data showed. In January 2025, there were around 582,500 pupils at English private schools, down from 593,500 at the same point last year.
When the policy was introduced, Treasury impact assessments estimated that private school fees would increase by around 10 per cent as a result of the introduction of VAT,
But in May, ISC figures showed that fees have increased by 22.6 per cent in the past year, with parents now paying out more than £22,000 a year on average.
The Treasury predicts that 35,000 pupils would move into UK state schools 'in the long-term steady state'.
A further 2,000 children would leave private schools, the department estimated, consisting of international pupils who do not move into the UK state system or domestic pupils who move into homeschooling.
The ISC has been contacted for comment.