Domesday Live

Why do private schools now charge VAT?

It was a Labour manifesto pledge. Labour argued that private schools should not have a tax break that other services do not have, and that the money raised, together with ending the business rates relief private schools got as charities, would pay for thousands of extra state school teachers. Critics say it raises fees, pushes some children into state schools and may raise less than hoped.

Why it happens

• What changed. From the January after the 2024 election, VAT at the standard rate of 20% was added to private school fees, and private schools in England lost their charity relief on business rates.
• Why the government did it. Labour said education is a service where families who can pay for a private option had not paid VAT, and promised to use the money to recruit 6,500 more teachers in state schools.
• What it means for families. Schools can reclaim VAT on some of their own costs, so fees have not all risen by 20%, but many have gone up, and some families have moved their children to state schools.
• What it means for state schools. Pupils who move to the state sector need places, which local councils must find. How many move, and where, is still debated.
• The evidence is disputed. Estimates of how much it raises, how many children move and what that costs the state differ, so supporters and critics read the same figures differently.