The High Court has ruled against a legal challenge brought by families and private schools seeking to overturn Labour’s new policy applying 20% VAT to private school fees.
Judges this morning rejected all claims brought forward in the judicial review, marking a significant defeat for the families of private school pupils, many of whom argued the tax violated human rights and unfairly targeted vulnerable groups.
The policy — a cornerstone of Labour’s education funding reforms — came into effect in January 2025, and is expected to raise £1.5 billion in its first year, rising to £1.7 billion annually by 2029/30, according to the Office for Budget Responsibility.
The case was launched by three groups of families, most of whom remained anonymous, alongside a coalition of independent schools. Their lawyers claimed that the VAT breached children’s right to education under the European Convention on Human Rights and was discriminatory against:
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Pupils with special educational needs (SEN)
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Families seeking faith-based education
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Children needing single-sex learning environments
One of the few named claimants, Stephen White, whose four children attend Bradford Christian School, joined a protest outside the High Court in April alongside other parents. The demonstrators highlighted the lack of suitable state alternatives for their children, particularly those with SEN or specific religious requirements.
Families of SEN children were particularly vocal, arguing they had no option but to pay for private provision due to the failure of the state system. They noted that a National Audit Office (NAO) report described state SEN services as “unsustainable”, a position echoed by Education Secretary Bridget Phillipson, who called the system “broken”.
However, the court ruled that evidence from the NAO report was inadmissible, as it constituted proceedings in Parliament — a legal technicality that undermined part of the claim.
In court, government lawyers, led by Sir James Eadie KC, defended the policy as necessary, proportionate, and fair. They noted that exemptions for SEN or religious education had been considered during consultations but were rejectedon the grounds they would be “revenue diminishing, unfair, unworkable and/or administratively onerous.”
They argued the VAT was part of a broader goal to fund public services, including state schools and teacher recruitment, while enhancing the fairness of the tax system.
Children with an Education, Health and Care Plan (EHCP) remain exempt from the VAT, but critics argue this covers only a small proportion of SEN pupils, leaving many families without support.
The ruling comes amid political controversy over how the revenue raised from the VAT will be used. Labour had originally pledged to use “every penny” for education, including hiring 6,500 new teachers. But in a post following the Spending Review, Prime Minister Sir Keir Starmer suggested the funds would now also support affordable housing.
The shift drew criticism from opposition parties. Kemi Badenoch, Conservative leader, wrote on X:
“You said ‘every penny’ would go into state schools… but now it’s housing?”
Labour insists that the funding supports broader social investment to ease pressure on the public sector, including housing that indirectly benefits the education system by reducing overcrowding and pupil mobility.
The Office for Budget Responsibility previously estimated that 35,000 pupils — around 7% of all independent school students — may leave the sector due to the VAT. Many independent schools are now considering fee restructuring, bursaries, or cost-cutting measures to retain students.
Faith schools, single-sex institutions, and smaller independent providers catering to niche or vulnerable communities could be particularly affected.
Despite the setback, legal experts suggest further appeals are unlikely to succeed, though political pressure is expected to continue.