Private school VAT changes: What you need to know about the Independent Schools Council's legal challenge

• Private schools will have to pay VAT on fees from January under current government plans.
• But a group representing more than a thousand independent schools plans to launch a legal challenge.
• The proposed legal challenge will be launched on behalf of parents, including those of children with SEND.

Private schools are poised to take legal action against the Government, over a policy they fear will have a big impact on small faith, special education, and independent girls’ schools.

Even before Labour’s general election victory this year, the party had pledged to start making private schools pay VAT on the tuition fees they charged parents, which they described as closing a tax loophole. Chancellor Rachel Reeves held firm on the plan in last week’s Budget, saying that schools would have to start paying VAT as of January 2025. The Government would introduce legislation to remove their business rates relief from April 2025 as well.

The changes have proven controversial. Some schools have responded by increasing fees, putting the often already expensive schools further out of many families’ reach. Now the board of the Independent Schools Council (ISC), which represents some 1,400 private schools across the UK, has voted to issue a legal challenge against the plan.

So why exactly is the Government pushing to make private schools pay VAT, and why are families and schools so against it? Here’s what you need to know about the pending lawsuit:

Why does Labour want to tax private schools on their fees?

The Government has said it wants to use the extra money from taxing independent schools - which is expected to be to the tune of hundreds of millions of pounds - to bankroll improvements to state-funded schools.

Chancellor Rachel Reeves said in her Budget day speech: “Ninety four per cent of children in the UK attend state schools. To provide the highest quality of support and teaching that they deserve, we will introduce VAT on private school fees from January 2025.”

This money will, in part, go towards recruiting and training thousands of new teachers, Reeves has previously said. The BBC reports that there is currently a severe teacher shortage in the UK, particularly when it comes to secondary school teachers.

There are a number of other government school initiatives underway that may also eventually benefit from extra funding, including its free school breakfasts programme, and plans to roll out mental health staff in schools.

Stay up-to-date with the latest UK news and culture with our free UK Today newsletter.

What is the ISC lawsuit about?

The ISC’s upcoming legal challenge, which will be headed by leading barrister Lord David Pannick KC, according to the BBC, will be brought on behalf of families impacted by the change. Some of the groups which have previously spoken out against the move include military families - which frequently make use of boarding schools - and parents of children with special educational needs and disabilities (SEND).

Many of these families turn to private schooling to meet their child’s needs. In an email to its members last week, the organisation said that it would be arguing that they were not able to find a suitable alternative education in the state school sector.

Chief Executive Julie Robinson said the legal action was about “defending the rights of families who have chosen independent education, but who may no longer be able to do so as a direct result of VAT on their fees”. She continued: “We continue to ask the government to work with us to mitigate the risks of this policy on specialist arts education, on low-fee faith schools, on small girls’ schools and on children with SEND.”

The ISC wants there to be a judicial review of the government's policy, the BBC added. It would focus around claims that the change has breached the European Convention on Human Rights - specifically the right to education, and the prohibition of discrimination.

What do you think about the impact paying VAT could have on private schools in the UK? Have your say and make your voice heard by leaving a comment below.