High Court refuses to challenge Labor’s VAT policy in private schools, hitting parents and schools

The High Court ruled against legal challenges raised by families and private schools, and they tried to overturn Labour’s new policy that applies 20% VAT to private school fees.

The judge rejected all claims made in the judicial review this morning, marking a significant failure for the families of private school students, many of whom believe taxes violate human rights and are unfairly targeting vulnerable groups.

According to the Office of Budget Responsibility, the policy is the cornerstone of Labor’s education funding reform that came into effect in January 2025, and is expected to raise £1.5 billion in the first year and increase to £1.7 billion per year by 2029/30.

The case was initiated by three groups of families along with a coalition of independent schools, most of which were anonymous. Their lawyers claim that VAT violates the right to education of children under the European Convention on Human Rights, for:

• Students with Special Educational Needs (SEN)

• Families seeking faith-based education

• Children who need a single learning environment

A handful of four children, Stephen White, named claimant, attended Bradford Christian School, who joined other parents in April to protest outside the High Court. Demonstrators stressed the lack of appropriate state alternatives for their children, especially those with specific religious requirements.

The family of Sen’s children spoke out in particular, believing that they had no choice but to pay private regulations for the failure of the state system. They noted that the National Audit Office (NAO) report called state senator service “unsustainable,” a position responded by Education Secretary Bridget Phillipson, who called the system “broken.”

However, the court ruled that the evidence in the NAO report was unacceptable because it constituted a parliamentary lawsuit, which was a legal technique that damaged the claims part.

In court, government lawyers led by Sir James Eadie KC defended the policy when necessary, proportion and fair. They noted that exemptions to SEN or religious education were considered during the consultation period, but were denied that they would “reduce income, unfairness, inaction and/or administratively heavy income”.

They believe that the VAT is part of a broader goal of funding public services, including state schools and teacher recruitment, while enhancing the equity of the tax system.

Children with Education, Health and Care Programs (EHCPs) are still exempt from VAT, but critics believe this covers only a small percentage of forest students, and many families are not supported.

The ruling is a political controversy about how to exploit VAT revenue. Labor initially promised to use “every cent” for education, including hiring 6,500 new teachers. However, in an article after the expenditure review, Prime Minister Sir Keir Starmer said the funds will now also support affordable housing.

This shift has aroused criticism from the opposition. Conservative leader Kemi Badenoch wrote on X:

“You said ‘every cent’ would go to state schools…but are you living now?”

Labor insists that funds support broader social investment to alleviate pressure on the public sector, including by reducing overcrowded and student mobility through housing in a education system that reduces overcrowded education.

The Office of Budget Responsibility previously estimated that 35,000 students (about 7% of all independent school students) could leave the industry due to VAT. Now, many independent schools are considering charging restructuring, bursary or cost-cutting measures to retain students.

Faith schools, single-sex institutions, and smaller independent providers that cater to niche or disadvantaged communities may be particularly affected.

Despite the setbacks, legal experts believe that further appeals are unlikely to succeed despite the hope of continuing political pressure.