Education should be a fundamental right, accessible to all without financial barriers.
However, the recent discussions about imposing VAT which adds 20% on private school fees threaten to undermine this principle.
If implemented, this tax could significantly increase the cost of private education, placing an additional financial burden on families and potentially limiting access for those who rely on these schools.
This move is particularly concerning for families with children who have special needs, as they often depend on private institutions for tailored support and specialised resources.
As education plays a pivotal role in shaping future generations, it is essential to ensure that financial barriers do not restrict access to quality schooling and that every child, regardless of their background or needs, receives the support they deserve.
The new Labour government is moving forward with its campaign pledge to tax independent school fees and has initiated a consultation to implement this starting in January 2025.
Around 6-7% of UK pupils, approximately 560,000 to 570,000 students, are educated in independent schools.
A 2019 report from the Sutton Trust and the Social Mobility Commission highlighted that many leaders in politics, business, and the media were educated at independent schools.
Some schools specialise in teaching children with special educational needs and disabilities (SEND). In some cases, local authorities fund children with education, health and care (EHC) plans to attend independent special schools. These schools represent a third of special schools and educate 5% of pupils with EHC plans. In 2022, local authorities placed over 20,000 children and young people in independent special schools.
The Government claims this move will fund priorities such as hiring 6,500 new state school teachers. However, critics worry the state sector may struggle with increased demand, and some analyses suggest the policy could cost taxpayers £1.8 billion.
To cover the average annual school fees of £17,000 for two children over 10 years, a family would need £340,000 in disposable income. If the family cannot afford the additional VAT on these fees, they would essentially gain a significant financial advantage—equivalent to enough savings to purchase a house.
A 2018 Baines Cutler analysis and a 2023 EDSK report, estimate that adding VAT to independent school fees could push up to 25% of students to switch to state schools, with some schools potentially facing closure. Independent schools themselves estimate up to 33% of children may be forced to leave. Additionally, a survey by Ashbridge Partners found 18% of parents would "definitely" move their child to a state school, with 21% "probably" doing the same.
Recently, lawyers have warned HM Treasury that the proposed policy could unfairly disadvantage children with special educational needs and disabilities (SEND), and have threatened legal action if it is not abandoned.
They argue that increasing school fees might force SEND students out of private schools, where their specific needs are currently better accommodated, leaving the state sector unable to provide adequate support.
This marks the first formal legal challenge to Labour’s plans, which have faced significant criticism. Additional legal challenges may emerge concerning military families and students in faith schools.
Labour’s VAT tax could backfire economically
Research from the Adam Smith Institute suggests that Labour's policy to tax independent school fees could have significant negative impacts—not only on children forced to leave their schools due to higher costs but also on the broader economy. While, Labour estimates the policy could generate around £1.5 billion, the Adam Smith Institute predicts it would raise only £0.84 billion if 5% of students leave. If 10% leave, the policy would break even, and if 25% exit, it could cost the Treasury £2.51 billion.
Speaking to Asian Voice, Director of Research at Adam Smith Institute, Maxwell Marlow emphasised VAT exemption “could raise no money at all” and may even result in a £1.6bn loss. He said, “Independent schools, especially smaller ones, will likely increase fees to cover the new 20% VAT, as 71% of their budgets go to staffing. If parents cannot afford the higher fees, schools may lose students or even close, leading to job losses for teachers and support staff. This could increase costs for the state, as more students would need to be accommodated in the state system, funded by local authorities. Additionally, withdrawing 40% of the labour needed to earn these fees could impact downstream tax revenues and negatively affect economic output.”
Maxwell stated that policymakers should anticipate a 15–25% migration of students from independent to state schools. He cautioned that, while exact numbers are uncertain, historical precedents, like the situation in Greece, suggest potential chaos. He noted, “15-25% migration, we would see about 100,000 students leave the private sector (reducing its revenue significantly and creating significant unemployment). The state sector, in some areas of the country, would be overwhelmed and spaces could not be provided for children. This may force local authorities to continue paying the fees on behalf of parents, in order to maintain their statutory obligations of providing universal education.”
Parents fight back against VAT
Many parents are anxious about the impact of the VAT on independent school fees. To counter this, a group of concerned parents launched the “Education Not Taxation” petition to prevent the 20% VAT imposition and avoid forcing students to switch schools. Asian Voice spoke with several parents who support the petition.
Spokesperson of Education Not Taxation, Loveena Tandon said, "The Education Not Taxation campaign has tirelessly fought to show that Labour's determination to tax independent school fees will force children out of their schools. We have shown the effects this will have on children's wellbeing, as well as the pressure it will cause already strained state schools. We took our concerns directly to Downing Street, through our petition with over 200,000 signatures. It is clear that Labour have not heard us, and nor have they heard the concerns of their own colleagues in the House of Lords.
Though the Education Not Taxation campaign continues to seek dialogue and hope reason will prevail, we fully support the parents who are pursuing legal action. They, like many parents we hear from each and every day, feel that they have been given no other choice. We wish them all the best of luck in this important fight."
Senior Finance Manager, Bhaveen Jobanputra whose daughter is studying in an independent school explains his motivation for signing the “Education Not Taxation” petition. He argues that taxing education is unjust, especially given past issues with such policies, like those in Greece. He said, “As a taxpayer, I already contribute to education funding through my taxes, which feels like paying twice for something I don’t use. My wife, a primary school teacher, has observed increased demand for state school places, raising concerns about the added pressure on the state system. Additionally, children with special needs who require smaller class sizes and more attention are particularly vulnerable to being priced out of independent schools, which is unfair to families struggling to afford it.
“There is also a misconception that all private school parents are wealthy, which is not true for many working-class families like ours. Instead of targeting these families, other revenue sources could be explored, such as increasing taxes on gambling companies or tackling tax avoidance by the super-wealthy. Overall, there are better ways to address funding shortfalls without disproportionately affecting certain groups. This is why I signed the petition and remain active in opposing this policy,” he added.
Bhaveen expresses concern about the government's VAT increase on education, starting in January. He said, “The government's plan to impose a VAT increase starting in January, midway through the school year, shows a lack of empathy for parents. It forces families into hasty decisions and overlooks the need for a gradual implementation, such as a phased 5% increase. The impact on children with special needs, who rely on private schools due to inadequate state provisions, is particularly concerning. Many families are already stretched thin, and this sudden fee hike could be devastating. The government's insensitivity to these issues, reminiscent of their handling of other matters like the winter fuel allowance, is deeply troubling.”
Vikkas Puri, Owner of Thekaa Gastropub, explained his decision to sign the petition, saying, “If you look at the broader picture, it’s clear that this approach seems unfair. It feels like a targeted measure that penalises a specific group without addressing more pressing issues. For example, private healthcare is a significant concern; many doctors are leaving the NHS for better pay in private sectors, which contributes to the leakage in the system. If we’re talking about "levelling up," why not focus on these critical areas instead? Even when patients use private hospitals, the burden still falls on the NHS because all medical records and data are shared.
“In contrast, this situation seems to single out a small group of students and parents without adequate notice or choice. The abrupt change in policy, especially in the middle of a term, without proper communication or a clear process, feels very unfair. I’ve tried to get clarity from the council, but their instructions are vague and unhelpful. This lack of transparency and consideration for those affected make the treatment seem particularly unjust,” he added.
Revathi*, a mother of two, highlighted how the VAT imposition on school fees would significantly impact her family’s finances. She shared, “I used to live in the US, my family situation in India wasn't great. I lost my sister to Covid—she was a doctor taking care of my parents—and after her passing, everything fell on my shoulders. Managing it all from the US became impossible, so we moved closer to India, with my husband’s company offering an opportunity in the UK. Education is extremely important to us. My kids worked hard to earn scholarships to private schools, not something we could afford easily. We’ve made significant sacrifices—no vacations, cutting expenses—to give them the best education possible. My 13-year-old even takes two buses and a tram to school to save money on coaching.
“However, the financial pressure is mounting, especially with two kids in private school. We’re doing everything we can, but a proposed 20% fee increase will make it impossible to continue. If that happens, we have tough decisions ahead. One option is to return to India, where my company offers a good job, and I can care for my father, who was diagnosed with blood cancer. Another is to move the kids to state schools and work with them on extra classes, but that would mean reducing my work hours or even quitting my job, which adds to the stress. We're trying to take it step by step, but balancing private school, elderly care, and household responsibilities has become overwhelming,” she added.
Speaking about the proposed changes, Revathi stressed the need for more time to adapt. "First, we need more time to adjust. The proposed changes shouldn’t happen so quickly—at least give us a year. We want the petition to be delayed until September 2026 which will give the government time to plan state school provision for our children and also help us evaluate our financial condition to make decisions on changing housing etc. Schools aren’t ready, and applications for our preferred schools aren’t open due to the rush. My son is entering GCSE next year, so I need to find the right school now, and the time we have is just too short. Second, the 20% increase is too high. While inflation rises, salaries don’t. I’ve lived in the US, Ireland, and India, and the UK has the highest taxes and mortgage rates. Why are we being treated like we’re wealthy?”
“Private schools offer opportunities for bright kids to excel. For example, my son, who is highly intelligent, was not challenged in state school, but in private school, he’s placed in a small group where they push him to new levels. These kids are the future leaders, and closing private schools would be a loss for the country. I work with state school kids through internship programmes, and while they have potential, it will take years to reach the same level. I don’t want my child’s education sacrificed in that transition,” she added.
*Name changed to protect anonymity
