How much money could be raised by charging VAT on private school fees?

Despite its current political salience, the proposal to charge VAT on private (‘independent’) school fees in England is nothing new. The Labour Party’s 1983 election manifesto set out plans to “withdraw charitable status from private schools and all their other public subsidies and tax privileges [and] we will also charge VAT on the fees paid to such schools.” Labour’s more recent manifestos in 2017 and 2019 proposed similar reforms, with the 2017 manifesto including the specific claim that the removal of the VAT exemption for private school fees would raise £1.6 billion a year. The debate over the taxation and charitable status of private schools has become increasingly high-profile, with Prime Minister Rishi Sunak recently claiming that Labour’s plans amount to “attacking the hard-working aspiration of millions of people in this country”. On that basis, this research note investigates the source and credibility of the often-cited £1.6 billion figure to assess whether it deserves to be included in discussions about the future of private schools. The findings in this note are not intended to represent a definitive answer on this matter, not least because some assumptions had to be made about where previous calculations and estimates came from. Nevertheless, this note aims to contribute to a pragmatic evidence base that education experts and policymakers can use to deliberate on the merits (or otherwise) of removing charitable status from private schools along with its financial implications for those schools as well as taxpayers. This research note forms part of a larger research project at EDSK on the future of private schools in England, which is set to conclude in July 2023.