Private school families lose legal challenge against Labour VAT raid

Telegraph

13-06-2025

Private school families have lost their High Court challenge against the Government over its decision to apply VAT on fees.
Three separate challenges were heard together in a judicial review between April 1 and 3, using more than a dozen families as case studies.
In a single written judgment issued on Friday, the three judges presiding over the case said they 'dismiss the claims'.
Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain said the VAT policy was 'proportionate' in its aim to raise extra revenue for state schools.
The Independent Schools Council (ISC), which was part of the legal challenge and represents more than 1,400 private schools, said it was 'carefully considering the court's judgment and next steps'.
Other claimants vowed to appeal the ruling, including three Christian schools supported by the Christian Legal Centre.
Private school families sued the Government over its decision to apply 20 per cent VAT to fees, which came into force in January.
Parent groups were seeking a 'declaration of incompatibility' under human rights laws. Even if successful, this would not have overturned the VAT policy in itself, but could have forced the Government to take a second look at the tax raid or hand out exemptions.
The ISC's case was wrapped together with two others, using children as case studies to highlight the alleged unfairness of the policy. They included children with special education needs (SEND) who are not eligible for tailored care plans, religious families with children at faith schools, families at bilingual schools and a girl at a single-sex school.
Claimants argued that the VAT raid inhibits their fundamental right to education for some pupils, and disproportionately affects lower-income families.
'Broad margin of discretion'
In their ruling issued on Friday, the three judges accepted that Labour's VAT raid 'interferes' with the claimants' right to education under the Human Rights Act 1998, but insisted that the Government had a 'broad margin of discretion' in balancing this against its wider education aims.
The High Court judges added that parts of the European Convention on Human Rights referenced in the case 'go no further than the right of access to whatever educational system the state chooses to provide... and the right to establish a private school'.
They argued that none of the parents in the lawsuit are obliged to continue to send their children to private schools, and that ministers were right not to exempt such families, as this would squeeze the overall revenue gain from the policy.
In their claim against the Government, private school families had also taken issue with ministers' repeated insistence that the levy was ending a 'tax exemption' or 'tax break', arguing that education has until now not been subject to VAT in Europe.
The judges said such comments were 'in our view, more a slogan than a legally significant description', adding that Brexit may have even paved the way for the Government to enforce its tax raid on independent schools.
Lawyers for the claimants had argued that the VAT policy made the UK an outlier in the Council of Europe, but the judges noted that 'most Council of Europe states are in the European Union – and EU member states cannot impose VAT except in accordance with EU law'.
'This is therefore one respect in which the UK's exit from the EU has increased the scope of Parliament's freedom to determine policy for the UK,' they said.
'Unprecedented tax on education'
The decision has been met with backlash from private schools. Julie Robinson, the chief executive of the ISC, said: 'This is an unprecedented tax on education and it was right that its compatibility with human rights law was tested.
'We would like to thank the claimants who shared their stories on key issues: SEND, faith schools, bilingual provision and girls-only education. It showcased how vital independent schools are for many families and the broad, diverse community choosing what they feel is the right education for their child.
'The ISC is carefully considering the court's judgment and next steps. Our focus remains on supporting schools, families and children. We will continue to work to ensure the government is held to account over the negative impact this tax on education is having across independent and state schools.'
Ben Snowdon, a headteacher at Emmanuel School, an independent Christian School in Derby that was part of the legal challenge, said: 'The consequences of this policy will be devastating for independent Christian schools and many other low-cost independent schools across the country.
'It is especially concerning to parents who are not from affluent backgrounds and who have children with special education needs.
'At Emmanuel School we share the Government's desire to ensure that all children have access to high-quality education, but we're deeply concerned that the Government's VAT proposals will hinder this aim.'
Sir Keir Starmer has insisted that Labour's VAT raid will raise £1.8 billion a year by the end of the decade, which the party has promised to spend on raising state school standards.
Court documents obtained by The Telegraph earlier this year revealed that the Government deliberately chose the 'most disruptive' start date for the VAT raid after being presented with a range of options.
Ministers toyed with a later start date for the tax but ultimately decided to implement it in the middle of an academic year in order to 'maximise revenue'.
In their judgment on Friday, Dame Victoria, Lord Newey and Mr Chamberlain said they 'do not consider that the decision to introduce the measure from January 2025 exceeded Parliament's broad margin of discretion'.