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Times
13-06-2025
- Politics
- Times
Parents and private schools lose High Court case against VAT on fees
Parents and private schools have lost their legal battle against VAT on fees in the High Court. The judgment on Friday dismissed the arguments made by three separate groups that the new government policy discriminated against children with special educational needs, among others. The ruling said the tax, which was part of Labour's general election manifesto, was proportionate in its aim to raise money for state schools. The Independent Schools Council (ISC) said it was disappointed by the ruling which came after a three-day hearing in April. At least one claimant said they would appeal and the ISC pledged to continue to hold the government to account over the tax. The Treasury, Department for Education and HMRC were named in the application for a judicial review which claimed VAT on fees was discriminatory and a breach of human rights law. Nearly 20 families and faith schools had joined forces with the ISC to challenge the policy, saying it was unfair to parents wanting a faith school or single-sex education, or those who had children with special educational needs but did not have an education health and care plan. Schools and parents were surprised when the tax was introduced in January rather than at the start of the next academic year. The government repeatedly said it would raise at least £1.6 billion a year which would be ploughed back into state schools, including paying for 6,500 more teachers. But Sir Keir Starmer was widely criticised on Thursday for saying on social media that the VAT windfall would fund new housing. Both sides had appointed leading barristers. The barristers used by the government to argue their case had all attended private schools. In their ruling, the judges said the policy may have a discriminatory effect on children with special needs who do not have a Education, Health and Care Plan (EHCP), a legally enforceable document setting out what support they require. But to create an exemption, the judges added, would be unfair to the 1.1 million children with SEN in the state sector as less money would be raised to help them. Referring to parents who brought the claim, the ruling said: 'Not every decision to impose tax gives rise to a deprivation or interference with the possessions of the person who will end up paying it. None of the parents in this case are obliged to continue to send their children to private schools, and it is therefore doubtful whether the challenged measure interferes with a 'possession' of theirs.' Families had relied on an argument that the tax breached their right to education under the European Convention on Human Rights (ECHR) and was also discriminatory. Parents bringing the claim included those wanting single-sex education, foreign language education such as French lycées and Christian, Muslim and Charedi Jewish families. But the ruling said the convention did not require the state to facilitate one child's access to a private school, even if the parents' reason for preferring a private school is a religious one. Education Not Taxation, a private school parent lobby group, had hoped the ruling would lead to the overturning of the VAT policy altogether, although the judicial review would have had no legal force. It said: 'While we are disappointed in the overall outcome of the challenge, we are grateful that the court recognised that imposing VAT on school fees will have a disproportionately prejudicial effect on pupils with SEN but no education health and care plan (EHCP), and therefore that the government's measure discriminates against them.' It claimed the court ruling supported its argument that VAT on education violated the human rights of vulnerable children, adding: 'Labour have consistently demanded respect for the European Convention of Human Rights and we expect them to think hard about what these senior judges have said — does their concern for human rights not extend to these rights for children as well? We will continue to highlight the harms caused by taxing education.' Sophie Kemp, head of public law at Kingsley Napley, representing the claimants, said: 'Both the government and the court recognised [it] had a discriminatory impact on children at religious schools as well as significant impact on children with SEN. The court felt that it was not able to interfere because of the leeway it must give to parliament. Unfortunately, this doesn't help the claimants, who must now weigh their options.' Christian claimants, supported by the Christian Legal Centre, said they planned to appeal against the judgment. Sir James Eadie, for the government, said during the hearing that raising funds was the primary objective of the policy and that parliament was aware that some people would no longer be able to afford private school fees once VAT was added. He told the court: 'It is revenue raising for a purpose. To help fund the government's priorities for education and young people, including investing in state education.' Julie Robinson, 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: special educational needs and disabilities, faith schools, bilingual provision and girls-only education. 'The ISC is carefully considering the court's judgment and next steps. 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.' In December last year, the chancellor, Rachel Reeves, said: 'Every single penny of that money will go into our state schools to ensure every child gets the best start in life, and that is so often through being able to recruit and retain the best teachers.' Starmer wrote on X this week: ''In the budget last year, my government made the tough but fair decision to apply VAT to private schools. 'The Tories opposed it. Reform opposed it. Today, because of that choice, we have announced the largest investment in affordable housing in a generation.'
Telegraph
13-06-2025
- Politics
- Telegraph
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'.
The Independent
13-06-2025
- Politics
- The Independent
Private schools lose High Court battle against Starmer's VAT raid on fees
It comes after six families last year launched a legal challenge against the government's controversial tax raid, which imposes 20 per cent VAT on private schools, claiming it is discriminatory against certain children, such as those with special education needs (SEN). Supported by the Independent Schools Council (ISC), which represents 1,400 independent schools, the families sought a declaration of incompatibility under section 4 of the Human Rights Act, claiming the new tax is incompatible with the European Convention on Human Rights. But Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain said in a 94-page decision that while the legislation does interfere with some of the group's human rights, there was a 'broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise'. During a hearing in April, Lord David Pannick KC, representing one group of children and their parents, said that the needs of some children currently in private schools could not be met by state schools. The High Court was told that, as well as religious beliefs and SEN, some children are privately educated because of a need for a single-sex environment because of previous abuse, or because they are only temporarily in the UK and need to be educated in line with their home national curriculum. But Sir James Eadie KC, representing the Treasury, HMRC and the Department for Education, said abolishing the VAT exemption for private school fees was a prominent feature of Labour's manifesto at the last general election. While the legal challenge would not have been able to halt the VAT policy or reverse it even if successful, it would have been a major blow to ministers and piled pressure on them to consider further exemptions. The government has estimated the tax raid will raise £1.7bn per year by 2029-30, money which ministers said would be used to fund 6,500 new teachers for state schools. So far, private school pupil numbers have fallen by more than 11,000 in England following the tax hike, DfE data showed. In January 2025, there were around 582,500 pupils at English private schools, down from 593,500 at the same point last year. When the policy was introduced, Treasury impact assessments estimated that private school fees would increase by around 10 per cent as a result of the introduction of VAT, But in May, ISC figures showed that fees have increased by 22.6 per cent in the past year, with parents now paying out more than £22,000 a year on average. The Treasury predicts that 35,000 pupils would move into UK state schools 'in the long-term steady state'. A further 2,000 children would leave private schools, the department estimated, consisting of international pupils who do not move into the UK state system or domestic pupils who move into homeschooling. The ISC has been contacted for comment.
BBC News
13-06-2025
- Business
- BBC News
Private schools lose High Court challenge into VAT changes
Three high court judges have rejected a judicial review into the government's policy of adding VAT to private school representing families and private schools had argued that the policy was discriminatory and in breach of human rights Robinson, CEO of the Independent Schools Council, which represented some of the families said it is carefully considering the court's judgment and next government defended the policy in court saying it would raise £1.8bn a year by 2029/30 which it would spend on raising standards in the state sector.
Yahoo
09-06-2025
- Business
- Yahoo
How school fees can affect your mortgage borrowing
The increasing cost of private school fees in the UK has been well-documented over the past year. A combination of VAT, along with the removal of business rates and increased National Insurance payments means that, according to the Independent Schools Council (ISC), private schools have upped their fees by an average of 22.6% in the year to January. As a consequence, the ISC found the average termly fee for a day school was £7,382 (inclusive of VAT) in January 2025, compared £6,021, when no VAT was being added, in January 2024. As well as putting a significant dent in family finances, for many who require a mortgage to buy their home, this increase in fees will have a knock-on effect as to how much they can borrow. To find out the impact, we spoke to five mortgage experts about how school fees can affect borrowing and what people can do to mitigate it. Whether you're considering private school for the future or have children at one now, it's important to understand the part that school fees play in how much you can borrow on a mortgage. 'Lenders will view private school fees as an outgoing as they would with loans, hire purchase and, generally, it is viewed as a discretionary commitment,' says David Carmichael, founding director of Taylor Carmichael Financial Services. 'Whether the commitment has a few or many years to run is not a major characteristic for high street lending as the affordability models tend to analyse the data at the point of application.' If families have multiple children in private education, with a long commitment ahead of them, despite strong incomes, this can have an enormous effect on how much they can borrow, because their net disposable income is so limited. 'With fees often running into the tens of thousands each year, it's something that can make a noticeable difference to a lender's calculations. That said, how it's treated can vary, so it's always worth exploring your options with someone who understands the nuances,' says Sonya Matharu-Coxill, founder of The Mortgage Atelier. In terms of cold, hard figures, Justin Whitelock, private finance director at City Finance Brokers, says: 'If you were looking to max out your lending, a monthly cost of school fees of around £1,500 could reduce your lending by almost £100,000. The effect is felt more for those who need to make their income stretch.' As evidence, banks and building societies will often request recent bank statements, school invoices or contracts, in order to verify how much and how often payments are made. Lenders have their own criteria when it comes to school fees, and this is not always easy to uncover. 'Generally, mainstream high-street lenders tend to be stricter in how they treat school fees, applying them fully as committed outgoings,' says Adrian Anderson, of Anderson Harris. 'On the other hand, private banks and specialist lenders are more likely to take a more holistic view — especially if the borrower is high net worth, has family support, or liquid assets that could cover fees over time.' Read more: Pros and cons of lifetime ISAs One of these is The Mortgage Lender. '[It] stands alone in excluding school fees from any assessment, understanding that child/ren could be removed from the fee-paying school should the need arise,' says Mark Harris, chief executive of SPF Private Clients. That said, if your child only has a short time left in private education, for example six months, and there are no other children following behind, many lenders can be persuaded to disregard school fees altogether. If you're paying school fees and have a pot of money, it's worth thinking strategically about where best to put it: towards a bigger deposit or as a cushion for school fees further down the line. 'Where the borrower can demonstrate an alternative source of capital (such as savings or investments) that covers the cost of the fees for the time remaining that the child(ren) has left in school, then some lenders can ring-fence the cost and exclude the expenditure from the assessment,' says Harris. For most, this won't be an option, and they will need to decide where their money works the hardest. 'Whether it's wiser to boost your deposit or set money aside for school fees really depends on your overall financial picture,' says Matharu-Coxill. 'For some, a larger deposit might unlock better rates; for others, earmarking funds for school fees could offer more long-term stability.' 'In some cases, splitting the funds to maintain both a strong deposit and a ring-fenced education pot is a balanced approach. A qualified mortgage intermediary will be able to help you carry out the pros and cons of each option,' says Anderson. Many lenders won't accept ring-fenced savings for school fees as they can't be sure, after the mortgage has been approved, that they won't be spent on something else. While you should never hide or omit school fees when applying for a mortgage, there are things that you can do to limit their impact. Speak to a broker early – they have specialist knowledge and will know which lenders are likely to look positively at your case. 'With the right guidance, it becomes less about setbacks and more about strategy, because when we understand affordability limits early, we can build a plan around them. That might mean waiting for a promotion, banking a bonus, or simply choosing the right time to reapply,' says Matharu-Coxill. 'The earlier they're factored into your mortgage planning, the more clarity and control you'll have. It's not about saying 'no' to your goals; it's about making sure the timing aligns with your financial reality.' Read more: How to choose where to live as you get older You also need to plan holistically and make sure that, should interest rates or school fees increase, you will still be able to afford both – this is essentially also what lenders will be looking at. In many families, grandparents help with school fees. In these instances, Whitelock says: 'It's more advisable to let them pay directly, so they don't need to be factored into the client's costs, rather than transfer the termly cost to their child to reimburse the fees paid, as this would still be counted as their commitment.' Alternatively, it might be that you have to borrow less in order to afford paying out for school fees too. 'In my experience, some clients will buy a smaller property, or in an area that suits their strong desire for their children to receive a certain paid education,' says Carmichael. 'It is no surprise that in many areas throughout the UK there is a huge demand for family homes in catchment areas for high performing state schools.' Read more: How rising house prices can impact your finances 10 home upgrades that don't need planning permission What are green mortgages and are they the future?Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
