VAT on independent schools: judicial review hearing concluded

From 1 January 2025, all education and boarding services provided by private schools in England and Wales became subject to VAT at the standard rate of 20%.

Judicial review claims have been brought against the government to challenge this policy. If successful, this may lead to the policy being quashed - invalidating it as it stands and requiring the government to reconsider the policy in a lawful manner.

The hearing took place in the High Court from 1 to 3 April 2025 and the decision will follow in the coming weeks. Three judges were present, reflecting the significance and complexity of this case.  There was also a subsequent hearing as to the admissibility of a piece of evidence, which means the timeframe for a judgment is somewhat longer than usual.

Parties

Although their claims were heard together, there are three separate groups of claimants:

•    Families supported by the Independent Schools Council, which represents over 1,400 private schools;

•    A group of parents of children with special educational needs and disabilities (SEND), known as 'Education not Discrimination'; and

•    Certain faith schools and families attending them, including the Association of Muslim Schools, Chinuch UK and the Christian Schools Trust.

The defendant in the claim is officially Rachel Reeves as Chancellor of the Exchequer, with HMRC and the Department for Education also involved.

Grounds for judicial review

The claimants are seeking a declaration of incompatibility with Article 2 of the First Protocol of the European Convention on Human Rights (ECHR) - the right to education, and Article 14 (protection from discrimination). 

Arguments raised

The claimants argued at the hearing that the policy is disproportionate and a breach of the right to education under the ECHR. This is on the basis that it restricts access to education not available in the state sector – for instance, if the child has SEND, their parents want education aligning with their faith, if parents have chosen single-sex education due to bullying or to enable continuity of education for foreign nationals. In particular, the following points were raised:

•    The policy is unprecedented in all 46 other Council of Europe states.

•    Around a quarter of families affected by the VAT changes fall below the average wealth level.

•    The policy is discriminatory. For example, against Charedi Jewish children who would likely face antisemitism and discrimination in non-Charedi schools.

•    Higher fees could force 35,000 children with SEND into the state sector, which was stated to be 'in crisis'.

The government responded that:

•    The policy will raise money and standards in the state sector – with a net predicted benefit of £1.3bn to £1.5bn annually.

•    Parents who send their children to private school must pay ‘their fair share’ to raise standards for the 94% of children in state schools.

•    Parents who do not wish to send their children to state school are free to choose 'any private education for their child that they can afford', or they can 'educate their child at home'.

•    Parents already have the right to a place in state education which 'alone is sufficient to dispose of the challenge.’

•    General measures such as taxes, minimum wage laws and national insurance all affect parents' ability to pay school fees but are not considered to interfere with 'with freedom to offer or receive private education.'

•    Only children with a local authority education and healthcare plan that specifies a particular private school will be exempt from the policy.

•    Some faith schools are less likely to be impacted if their income is derived from other sources in addition to fees, eg donations from the community or religious organisations.

•    It is unlikely to make amendments for SEND schools: 'carving all children with SEND out of this policy would carry a significant cost and therefore undermine the government’s ability to improve education for the 94 percent of school children in the UK that attend state schools'.

•    The government said it would be administratively unworkable and unfair in principle to make exceptions for individual pupils.

Next Steps

If the claims are successful and the policy is quashed, the government may simply make its decisions again, giving more weight to the elements that were not adequately dealt with the first time around. Or it might look to appeal and take the matter into the higher courts.  So even a win provides little certainty.  

The date for judgment has not yet been announced. We will continue to monitor the position and will keep you informed.