Private school families lose legal challenge against Labour VAT raid
Private school families have lost their High Court challenge against the Government over its decision to apply VAT on fees.
Three separate challenges were heard together in a judicial review between April 1 and 3, using more than a dozen families as case studies.
In a single written judgment issued on Friday, the three judges presiding over the case said they 'dismiss the claims'.
Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain said the VAT policy was 'proportionate' in its aim to raise extra revenue for state schools.
The Independent Schools Council (ISC), which was part of the legal challenge and represents more than 1,400 private schools, said it was 'carefully considering the court's judgment and next steps'.
Other claimants vowed to appeal the ruling, including three Christian schools supported by the Christian Legal Centre.
Private school families sued the Government over its decision to apply 20 per cent VAT to fees, which came into force in January.
Parent groups were seeking a 'declaration of incompatibility' under human rights laws. Even if successful, this would not have overturned the VAT policy in itself, but could have forced the Government to take a second look at the tax raid or hand out exemptions.
The ISC's case was wrapped together with two others, using children as case studies to highlight the alleged unfairness of the policy. They included children with special education needs (SEND) who are not eligible for tailored care plans, religious families with children at faith schools, families at bilingual schools and a girl at a single-sex school.
Claimants argued that the VAT raid inhibits their fundamental right to education for some pupils, and disproportionately affects lower-income families.
'Broad margin of discretion'
In their ruling issued on Friday, the three judges accepted that Labour's VAT raid 'interferes' with the claimants' right to education under the Human Rights Act 1998, but insisted that the Government had a 'broad margin of discretion' in balancing this against its wider education aims.
The High Court judges added that parts of the European Convention on Human Rights referenced in the case 'go no further than the right of access to whatever educational system the state chooses to provide... and the right to establish a private school'.
They argued that none of the parents in the lawsuit are obliged to continue to send their children to private schools, and that ministers were right not to exempt such families, as this would squeeze the overall revenue gain from the policy.
In their claim against the Government, private school families had also taken issue with ministers' repeated insistence that the levy was ending a 'tax exemption' or 'tax break', arguing that education has until now not been subject to VAT in Europe.
The judges said such comments were 'in our view, more a slogan than a legally significant description', adding that Brexit may have even paved the way for the Government to enforce its tax raid on independent schools.
Lawyers for the claimants had argued that the VAT policy made the UK an outlier in the Council of Europe, but the judges noted that 'most Council of Europe states are in the European Union – and EU member states cannot impose VAT except in accordance with EU law'.
'This is therefore one respect in which the UK's exit from the EU has increased the scope of Parliament's freedom to determine policy for the UK,' they said.
'Unprecedented tax on education'
The decision has been met with backlash from private schools. Julie Robinson, the chief executive of the ISC, said: 'This is an unprecedented tax on education and it was right that its compatibility with human rights law was tested.
'We would like to thank the claimants who shared their stories on key issues: SEND, faith schools, bilingual provision and girls-only education. It showcased how vital independent schools are for many families and the broad, diverse community choosing what they feel is the right education for their child.
'The ISC is carefully considering the court's judgment and next steps. Our focus remains on supporting schools, families and children. We will continue to work to ensure the government is held to account over the negative impact this tax on education is having across independent and state schools.'
Ben Snowdon, a headteacher at Emmanuel School, an independent Christian School in Derby that was part of the legal challenge, said: 'The consequences of this policy will be devastating for independent Christian schools and many other low-cost independent schools across the country.
'It is especially concerning to parents who are not from affluent backgrounds and who have children with special education needs.
'At Emmanuel School we share the Government's desire to ensure that all children have access to high-quality education, but we're deeply concerned that the Government's VAT proposals will hinder this aim.'
Sir Keir Starmer has insisted that Labour's VAT raid will raise £1.8 billion a year by the end of the decade, which the party has promised to spend on raising state school standards.
Court documents obtained by The Telegraph earlier this year revealed that the Government deliberately chose the 'most disruptive' start date for the VAT raid after being presented with a range of options.
Ministers toyed with a later start date for the tax but ultimately decided to implement it in the middle of an academic year in order to 'maximise revenue'.
In their judgment on Friday, Dame Victoria, Lord Newey and Mr Chamberlain said they 'do not consider that the decision to introduce the measure from January 2025 exceeded Parliament's broad margin of discretion'.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
13 minutes ago
- Telegraph
The flat tax regimes that inspired Farage's plan to lure back rich non-doms
Nigel Farage is hoping an Italian-style flat tax regime will lure wealthy foreigners to Britain's shores. The leader of the Reform UK party has promised to impose a Robin Hood-style levy on rich non-doms, with the proceeds then redistributed among the lowest-paid workers. At first glance the policy may seem Left-wing, but in practice it is the wealthiest non-doms who would benefit the most from this generous scheme. The one-off payment would grant them a 'Britannia Card' which comes with an indefinite tax-free exemption on their offshore income and gains. It could potentially save a high-income worker tens of thousands in tax over the years. Reform said the tax status could be renewed every decade at no extra cost. The proposal comes amid fears that Rachel Reeves's decision to abolish the non-dom regime last August has triggered an exodus of high-income workers and entrepreneurs. Estate agent Knight Frank has estimated that the Treasury faces a £401m loss in stamp duty receipts thanks to a drop in sales of multimillion-pound homes since the reforms were first announced. The non-dom regime was replaced in April 2025 by the Chancellor's foreign income and gains regime, which allows new arrivals to avoid tax on offshore earnings for only their first four years of residence. Controversially, it also applies inheritance tax to the worldwide assets of individuals who have been in the country for over 10 years. By comparison, Mr Farage's proposal would shield eligible individuals from inheritance tax for 20 years. Writing in The Telegraph, Mr Farage said the policy would 'actively encourage the return of wealth and talent to the United Kingdom'. However, experts questioned how successful it would be in practice. The think tank Tax Policy Associates warned it could cost the UK £34bn in lost Government revenue. Miles Dean, of tax adviser Andersen, said: 'I fear that the damage has already been done and I doubt that this alone is enough to entice wealthy non-doms back, especially given that implementation is at least four years away.' David Denton, of wealth manager Quilter, said: 'Offering wealthy non-doms the chance to effectively buy their way out of UK tax may provide a short-term revenue boost, but risks creating a two-tier tax system that undermines public confidence.' Mr Denton also said there was no guarantee the regime would attract enough wealthy individuals to build a sizable pot for low-income workers. 'The idea of redirecting funds to support lower earners has populist appeal, yet it assumes significant and sustained uptake from globally mobile individuals – something far from guaranteed, particularly if future governments reverse course.' But the flat tax regime is far from a new concept. Other countries including Italy and Switzerland have also tried to entice wealthy expats through similar tax breaks. Italy Reform's offer to non-doms appears to be considerably more generous than Italy's, which first unveiled a flat tax regime for wealthy foreigners in 2017. Costing €200,000 (£171,390) per year, the scheme is renewable for 15 years and exempts non-doms from tax on foreign assets, with the option to add additional family members for €25,000 (£21,423) per person per year. It has proven to be a runaway success. While just 98 people used the scheme in 2017, by 2023 more than 2,000 taxpayers were enroled, according to citizenship by investment firm Relocate&Save. Mr Farage will give high-net-worth individuals a 20-year reprieve from UK tax, including inheritance tax, on worldwide assets and income for a one-off cost of £250,000. By comparison, to use the Italian scheme for 15 years would cost €3m in flat tax fees, making Reform's plan extremely competitive. Dominic Lawrence, partner at law Charles Russell Speechlys, said: 'The Reform proposal does appear to be more generous than the Italian lump sum tax regime, which requires payment of an annual levy of €200,000. If the proposed £250,000 payment really is one-off and there is no additional annual charge to access the remittance-style regime… then on the face of it this is remarkably generous.' Switzerland Mr Farage's proposals also go further than tax reliefs available to non-doms in Switzerland, which pioneered tax breaks to lure wealthy foreigners. Don-doms in Switzerland do not pay a flat fee to take advantage of favourable tax rules. Instead, taxes are based on the living costs incurred whilst in the country, which includes costs for housing, food, transport and leisure. The minimum these costs must be to qualify for the scheme is CHF 434,700 (£396,844) a year. The sum is then subject to tax rates that vary by region in the Alpine country, typically resulting in a tax burden between CHF 150,000 (£136,937) and CHF 350,000 (£319,520). In return, foreign income and assets of non-tax-residents are exempt from taxes and Switzerland imposes no federal inheritance or gift tax. Different minimum tax bases apply for EU and non-EU applicants depending on the region of Switzerland in which they reside. Greece Greece has been tipped as one of the countries set to benefit from the abolition of the UK's non-dom regime. Since 2019, it has offered a favourable tax regime which requires high-net-worth individuals to pay a lump sum of €100,000 per year on foreign-sourced income. They can claim the tax break for up to 15 years. For an additional €20,000 a year, they can also extend the tax benefit to members of their family. To use the scheme, the high-net-worth individual must invest at least €500,000 in Greece within three years, for example by purchasing a property or buying shares. Gibraltar The British Overseas Territory, located on the southern coast of Spain, offers an attractive tax regime for individuals worth more than £2m. Under the so-called 'Category 2' rules, qualifying individuals only pay tax on the first £118,000 of their worldwide income. This means a maximum tax charge of about £45,000 per year. To qualify, individuals must either own or rent a property in Gibraltar.
STV News
16 minutes ago
- STV News
First Minister calls for 'de-escalation' in Middle East conflict
First Minister John Swinney has said the situation in the Middle East needs to be 'de-escalated' amid the ongoing conflict. It comes after US President Donald Trump said three key nuclear sites in Iran were 'completely and fully obliterated' in the military strikes. The US is thought to have used B-2 stealth bombers to drop bunker-busting munitions on the sites, including the deeply-buried Fordo facility, as well as 30 Tomahawk cruise missiles launched from submarines. The US-UK base at Diego Garcia in the Indian Ocean is not thought to have been used in the operation. The First Minister told STV News that the situation needed to be 'de-escalated' during a visit to a school in the Springburn area of Glasgow on Monday. 'The international community must use every device and intervention at its disposal to make sure that's the case,' he said. 'There are obviously very dangerous circumstances that people are experiencing in the Middle East and it's important that they have all the support that's available to them should they require any assistance with their safety, and that will be available through the dialogue that we have with the Foreign and Commonwealth office.' During his visit, Swinney encouraged the UK Government to 'put all of their weight' behind diplomatic efforts to stem the conflict. 'To wake up to what we woke up to yesterday morning is very, very frightening and alarming, and I don't think any of us should underestimate the significance and the severity of the situation that we face.' He added: 'That's why I have made a strong plea for every resource of the international community to be deployed to de-escalate the situation and to get the world to step back from the brink.' Asked if he was concerned about British involvement in the conflict, he said: 'There's obviously the potential for this to have very wide-ranging implications, and they could involve the United Kingdom.' Swinney previously said the Middle East conflict has reached 'an alarmingly greater level of danger' after the US attacks on Iran in a post on X. 'The Middle East conflict has reached an alarmingly greater level of danger after the US attacks on Iran,' posted. 'The conflict must be stopped by a diplomatic solution delivered through the international community. And the UK Government must insist on that now.' The Prime Minister had earlier said Iran should 'return to the negotiating table', noting the region remains 'volatile'. He said: 'Iran's nuclear programme is a grave threat to international security 'Iran can never be allowed to develop a nuclear weapon, and the US has taken action to alleviate that threat.' Former first minister Humza Yousaf was critical of the Prime Minister's response. He posted on social media: 'An awful statement from the PM, which ignores our collective responsibility to uphold international law. 'Supporting illegal military action in Iran, and gas-lighting us about an imminent nuclear threat, is hauntingly reminiscent of the lies told in the run-up to the Iraq war.' Get all the latest news from around the country Follow STV News Scan the QR code on your mobile device for all the latest news from around the country
The Independent
17 minutes ago
- The Independent
Home Secretary decides to proscribe Palestine Action after ‘disgraceful attack'
The Home Secretary has decided to proscribe Palestine Action and will lay an order before Parliament next week to make membership and support for the protest group illegal. Yvette Cooper confirmed the move after Palestine Action vandalised two planes inside RAF Brize Norton in Oxfordshire on Friday. The incident is being investigated by counter-terror police. The ban under terror laws will make it a criminal offence to belong to or support the group, and will be punishable by up to 14 years in prison. A draft order will be laid in Parliament next Monday, and if approved after debates by MPs and peers, the ban could come into force by Friday. Ms Cooper said in a written ministerial statement: 'The disgraceful attack on Brize Norton in the early hours of the morning on Friday 20 June is the latest in a long history of unacceptable criminal damage committed by Palestine Action. 'The UK's defence enterprise is vital to the nation's national security and this Government will not tolerate those that put that security at risk.' Palestine Action posted footage online showing two people inside the base at RAF Brize Norton in Oxfordshire on Friday morning. The clip shows one person riding an electric scooter up to an Airbus Voyager air-to-air refuelling tanker and appearing to spray paint into its jet engine. The group has staged a series of demonstrations in recent months, including spraying the London offices of Allianz Insurance with red paint over its alleged links to Israeli defence company Elbit, and vandalising US President Donald Trump's Turnberry golf course in South Ayrshire. Ms Cooper said Palestine Action's activity has increased since 2024 and its methods have become 'more aggressive', with its members showing 'willingness to use violence'. She named three attacks at Thales defence factory in Glasgow in 2022, Instro Precision in Kent and Elbit Systems UK in Bristol in 2024, as causing damage costing millions of pounds. Ms Cooper said the ban will allow law enforcement to 'effectively disrupt the escalating actions of this serious group', describing a further vandalism attack on a Jewish-owned business last month that Palestine Action claimed responsibility for as 'clearly intimidatory and unacceptable'. 'Proscription represents a legitimate response to the threat posed by Palestine Action,' she said. 'Its activities meet the threshold set out in the statutory tests established under the Terrorism Act 2000.' The announcement comes as protesters clashed with police at a demonstration in support of Palestine Action in central London on Monday. The crowd surged towards police when officers tried to detain someone in Trafalgar Square in central London, while onlookers chanted 'let them go'. The protest had initially been planned to take place outside the Houses of Parliament, but the location was changed early on Monday morning after the Metropolitan Police imposed an exclusion zone. The Met Police commissioner Sir Mark Rowley said he was 'shocked' by the planned protest and described Palestine Action as an 'organised extremist criminal group'. Asked about Sir Mark's comments, Palestine Action spokesperson Max Geller said on Monday: 'It's really troubling that the head of the Met would pre-empt the Government and ban us from protesting (at the Houses of Parliament). 'It's a frustrating turn for democracy in this country.' A spokesperson for Palestine Action previously accused the UK of failing to meet its obligation to prevent or punish genocide. The spokesperson said: 'When our Government fails to uphold their moral and legal obligations, it is the responsibility of ordinary citizens to take direct action. The terrorists are the ones committing a genocide, not those who break the tools used to commit it.' The Home Secretary added the proscription is specific to Palestine Action and does not affect lawful protest groups or others campaigning on issues around Palestine and the Middle East. 'It is vitally important that those seeking to protest peacefully, including pro-Palestinian groups, those opposing the actions of the Israeli government, and those demanding changes in the UK's foreign policy, can continue to do so,' she said. The Home Secretary has the power to proscribe an organisation under the Terrorism Act of 2000 if she believes it is 'concerned in terrorism'. Some 81 organisations have been proscribed under the 2000 Act, including Islamist terrorist groups such as Hamas and al Qaida, far-right groups such as National Action, and Russian private military company the Wagner Group.
