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Why was VAT added to private school fees and what difference has it made?

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Vanessa Clarke

Education correspondent

Getty Images Two pupils wearing navy blue blazers face away from the camera as they write algebra on a whiteboard. The student on the left has her brown curly hair in a bun, and her classmate on the right has long light brown hair, half tied up.Getty Images

Average private school fees were 22% higher in January 2025 than in January 2024, according to the Independent Schools Council (ISC), which represents most independent schools in the UK.

The government introduced VAT on school fees in January to pay for more state school teachers in England.

But the ISC and a number of families have taken the government to the High Court over claims the policy is discriminatory and breaches human rights laws.

What is VAT and when was it added to private school fees?

Value added tax (VAT) is one of the government’s main sources of income. It is payable on top of the purchase price of many goods and services. The standard rate of VAT is 20%.

Previously, private schools did not have to charge VAT on their fees because of an exemption for organisations providing education. That exemption was removed on 1 January.

About half of England’s private schools are charities, which means that they also received an 80% reduction on business rates (taxes on properties used for commercial purposes).

The government removed that tax relief in April, but dropped earlier plans to scrap private schools’ charitable status entirely.

How will the government spend the extra VAT raised?

The removal of the VAT exemption is UK-wide, but each nation will decide how to spend the additional money received.

The government estimates that the policy will raise an extra £460m in the 2024/25 financial year, rising to £1.7bn by 2029/30.

Chancellor Rachel Reeves said “every single penny” will go to state schools – including funding the recruitment of 6,500 new teachers in England.

Schools have been struggling to attract and retain qualified teachers for many years, especially in subject areas like maths and science.

The government also said there will be funding to address other issues in schools, such as crumbling buildings and delays in the system for children with special educational needs and disabilities (Send).

How much do private schools cost?

Private schools – sometimes called independent schools – charge fees for most students.

While some famous schools, like Eton and Harrow, charge about £50,000 a year, the average is about £15,000.

There are about 2,500 private schools in the UK, educating about 7% of all pupils, including about 570,000 in England.

Private schools have more freedom than government-funded state schools, and do not have to follow the national curriculum.

Some local authorities pay for children with special educational needs and disabilities (Send) to attend private schools.

Those that have a local authority education, health and care plan (EHCP) which names a specific private school that can meet their needs do not have to pay VAT.

The government also said a grant to help cover the boarding school fees for children of military families was increased to take account of the VAT increase.

Have private school fees gone up?

The ISC represents more than 1,400 private schools. It said its annual census showed average school fees were 22.6% higher in January 2025 than they had been in January 2024.

It blamed the “triple whammy” of higher national insurance contributions, an end to charitable business rates relief and the introduction of VAT.

The government had previously said it expected fees to rise by an average of around 10%.

In response to the ISC figures, a Treasury spokesperson said the increase was “not only down to VAT”, and that private school fees had risen significantly in recent decades.

According to the the Institute for Fiscal Studies (IFS) think tank, average fees rose by 55% (after inflation) between 2003 and 2023.

However, the proportion of children being privately educated over the period did not fall.

Will the VAT changes mean the number of private pupils will fall?

When it announced the VAT increase, the government said it did not expect there to be a significant impact on the number of pupils attending private schools.

According to a Treasury memo seen by the BBC, initial estimates suggested that 54,000 pupils would be displaced, with most moving to state schools within the first two years.

However, the government now predicts that around 35,000 students will move to the state sector over a longer time period, and that class sizes will not increase.

It points to research by the IFS which said that state system could “easily accommodate extra pupils” because overall student numbers are set to fall by 700,000 by 2030.

That drop is larger than the total number of children currently attending private schools.

However, pupil numbers are not falling by the same amount everywhere, so some individual state schools could face pressure on class sizes.

The ISC says some of its members reported a 4.6% fall in the number of Year 7 pupils starting school in September 2024.

It believes the government has underestimated the level of pupil displacement that will be caused.

Why was the VAT policy challenged in court?

The legal challenge was brought by the ISC, a smaller group of Christian faith schools, and parent-led group Education not Discrimination.

They argue that the policy goes against the legal right to an education, and claim it is discriminatory because it affects families attending low-paying faith schools.

The group also cites the effect on children with Send. Those who attend private school because their needs “cannot be adequately met in the state sector” but who do not have an EHCP have to pay VAT.

The court was told that the government had considered introducing the policy in September 2025, rather than in January.

But it rejected this idea because the main objective of the VAT change was to raise additional tax revenue to support the 94% of children who attend state schools, and any delay would have undermined that.

Government lawyers argued that families who wished to opt out of “the system of universally accessible, state-funded education” were free to send their children to private school or to educate them at home.

If the legal challenge is successful, the government could consider amending the policy, but would be under no obligation to do so.



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Education

Blunkett urges ministers to use ‘incredible sensitivity’ in changing Send system in England | Special educational needs

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Ministers must use “incredible sensitivity” in making changes to the special educational needs system, former education secretary David Blunkett has said, as the government is urged not to drop education, health and care plans (EHCPs).

Lord Blunkett, who went through the special needs system when attending a residential school for blind children, said ministers would have to tread carefully.

The former home secretary in Tony Blair’s government also urged the government to reassure parents that it was looking for “a meaningful replacement” for EHCPs, which guarantee more than 600,000 children and young people individual support in learning.

Blunkett said he sympathised with the challenge facing Bridget Phillipson, the education secretary, saying: “It’s absolutely clear that the government will need to do this with incredible sensitivity and with a recognition it’s going to be a bumpy road.”

He said government proposals due in the autumn to reexamine Send provision in England were not the same as welfare changes, largely abandoned last week, which were aimed at reducing spending. “They put another billion in [to Send provision] and nobody noticed,” Blunkett said, adding: “We’ve got to reduce the fear of change.”

Earlier Helen Hayes, the Labour MP who chairs the cross-party Commons education select committee, called for Downing Street to commit to EHCPs, saying this was the only way to combat mistrust among many families with Send children.

“I think at this stage that would be the right thing to do,” she told BBC Radio 4’s Today programme. “We have been looking, as the education select committee, at the Send system for the last several months. We have heard extensive evidence from parents, from organisations that represent parents, from professionals and from others who are deeply involved in the system, which is failing so many children and families at the moment.

“One of the consequences of that failure is that parents really have so little trust and confidence in the Send system at the moment. And the government should take that very seriously as it charts a way forward for reform.”

A letter to the Guardian on Monday, signed by dozens of special needs and disability charities and campaigners, warned against government changes to the Send system that would restrict or abolish EHCPs.

Labour MPs who spoke to the Guardian are worried ministers are unable to explain essential details of the special educational needs shake-up being considered in the schools white paper to be published in October.

Downing Street has refused to rule out ending EHCPs, while stressing that no decisions have yet been taken ahead of a white paper on Send provision to be published in October.

Keir Starmer’s deputy spokesperson said: “I’ll just go back to the broader point that the system is not working and is in desperate need of reform. That’s why we want to actively work with parents, families, parliamentarians to make sure we get this right.”

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Speaking later in the Commons, Phillipson said there was “no responsibility I take more seriously” than that to more vulnerable children. She said it was a “serious and complex area” that “we as a government are determined to get right”.

The education secretary said: “There will always be a legal right to the additional support children with Send need, and we will protect it. But alongside that, there will be a better system with strengthened support, improved access and more funding.”

Dr Will Shield, an educational psychologist from the University of Exeter, said rumoured proposals that limit EHCPs – potentially to pupils in special schools – were “deeply problematic”.

Shield said: “Mainstream schools frequently rely on EHCPs to access the funding and oversight needed to support children effectively. Without a clear, well-resourced alternative, families will fear their children are not able to access the support they need to achieve and thrive.”

Paul Whiteman, general secretary of the National Association of Head Teachers, said: “Any reforms in this space will likely provoke strong reactions and it will be crucial that the government works closely with both parents and schools every step of the way.”



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The Guardian view on special needs reform: children’s needs must be the priority as the system is redesigned | Editorial

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Children with special educational needs and disabilities (Send) must be supported through the education system to fulfil their potential as fully as possible. This is the bottom line for the families of the 1.6 million children with a recognised additional learning need in England, and all those who support them. It needs to be the government’s priority too.

There is no question that the rising number of children receiving extra help has placed pressure on schools and councils. There is wide agreement that the current trajectory is not sustainable. But if plans for reform are shaped around the aim of saving money by removing entitlements, rather than meeting the needs of children by improving schools, they should be expected to fail.

If ministers did not already know this, the Save Our Children’s Rights campaign launched this week ought to help. As it stands, there is no policy of restricting access to the education, health and care plans (EHCPs) that impose a legal duty on councils to provide specified support. But ministers’ criticisms of the adversarial aspects of the current system have led families to conclude that they should prepare for an attempt to remove their enforceable rights. Christine Lenehan, who advises the government, has indicated that the scope of EHCPs could be narrowed, while stressing a commitment to consultation. Tom Rees, who chairs the department for education’s specialist group, bluntly terms it “a bad system”.

Mr Rees’s panel has had its term extended until April. The education select committee will present the conclusions of its inquiry into the Send crisis in the autumn. Both should be listened to carefully. But the education secretary, Bridget Phillipson, and her team also need to show that they are capable of engaging beyond the circle of appointed experts and parliamentarians. Parents can make their views known through constituency MPs. Their voices and perspectives need to be heard in Whitehall too.

This is a hugely sensitive policy area. There is nothing parents care more about than the opportunities provided to their children, and this concern is intensified when those children have additional needs. Some positive steps have been taken during Labour’s first year. Increased capital spending on school buildings should make a difference to in-house provision, which relies on the availability of suitable spaces. Ministers are right, too, to focus on teacher training, while inclusion has been given greater prominence in the inspection framework. As with the NHS, there is a welcome emphasis on spreading best practice.

But big questions remain. Families are fearful that accountability mechanisms are going to be removed, and want to know how the new “inclusive mainstream” will be defined and judged. Councils are concerned about what happens to their £5bn in special needs budget deficits, when the so-called statutory override expires in 2028. The concerning role of private equity in special education – which mirrors changes in the children’s social care market – also needs addressing.

Schools need to adapt so that a greater range of pupils can be accommodated. The issue is how the government manages that process. The hope must be that the lesson ministers take from their failure on welfare is that consultation on highly sensitive changes, affecting millions of lives, must be thorough. In order to make change, they must build consensus.

  • Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here.



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How AI is Transforming Education in Africa

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Artificial Intelligence (AI) is reshaping industries across the globe, and education in Africa is no exception. From personalized learning platforms to AI-driven teacher training, the continent is witnessing a surge in innovative solutions tackling longstanding challenges. In this Q&A Insights piece, we dive into how AI is revolutionizing education, addressing questions from our iAfrica community about its impact, opportunities, and hurdles.

What are the biggest challenges in African education that AI can address?

Africa’s education sector faces issues like limited access to quality resources, teacher shortages, and diverse linguistic needs. AI can bridge these gaps in practical ways. For instance, AI-powered platforms like Eneza Education provide mobile-based learning in local languages, reaching students in remote areas with affordable, interactive content. Adaptive learning systems analyze student performance to tailor lessons, ensuring kids in overcrowded classrooms get personalized attention. AI also supports teacher training through virtual simulations, helping educators refine skills without costly in-person workshops.

“AI can democratize education by making high-quality resources accessible to students in rural areas.” – Dr. Aisha Mwinyi, EdTech Researcher

How is AI being used to improve access to education?

Access is a critical issue, with millions of African children out of school due to distance, poverty, or conflict. AI is stepping in with scalable solutions. Chatbots and virtual tutors, like those developed by Ustad Mobile, deliver bite-sized lessons via SMS or WhatsApp, working on basic phones for low-income communities. In Nigeria, uLesson uses AI to stream offline-capable video lessons, bypassing unreliable internet. These tools ensure learning continues in areas with limited infrastructure, from refugee camps to rural villages.

Can AI help with language barriers in education?

Absolutely. Africa’s linguistic diversity—over 2,000 languages—creates unique challenges. AI-driven translation tools, such as those integrated into Kolibri by Learning Equality, adapt content into local languages like Swahili, Yoruba, or Amharic. Speech-to-text and text-to-speech systems also help non-literate learners engage with digital materials. These innovations make education inclusive, especially for marginalized groups who speak minority languages.

What are some standout African AI education startups?

The continent is buzzing with homegrown talent. M-Shule in Kenya uses AI to deliver personalized SMS-based learning, focusing on primary school students. Chalkboard Education, operating in Ghana and Côte d’Ivoire, offers offline e-learning platforms for universities, using AI to track progress. South Africa’s Siyavula combines AI with open-source textbooks to provide math and science practice, serving millions of learners. These startups show Africa isn’t just adopting AI—it’s innovating with it.

What concerns exist about AI in education?

While the potential is huge, concerns linger. Data privacy is a big one—students’ personal information must be protected, especially in regions with weak regulations. There’s also the risk of over-reliance on tech, which could sideline human teachers. Affordability is another hurdle; AI solutions must be low-cost to scale. Experts emphasize the need for ethical AI frameworks, like those being developed by AI4D Africa, to ensure tools are culturally relevant and equitable.

“We must balance AI’s efficiency with the human touch that makes education transformative.” – Prof. Kwame Osei, Education Policy Expert

How can policymakers support AI in education?

Policymakers play a pivotal role. Investing in digital infrastructure—think affordable internet and device subsidies—is crucial. Governments should also fund local AI research, as seen in Rwanda’s Digital Skills Program, which trains youth to build EdTech solutions. Public-private partnerships can scale pilots, while clear regulations on data use build trust. Our community suggests tax incentives for EdTech startups to spur innovation.

What’s next for AI in African education?

The future is bright but demands action. AI could power virtual reality classrooms, making immersive learning accessible in underfunded schools. Predictive analytics might identify at-risk students early, reducing dropout rates. But scaling these requires collaboration—between governments, startups, and communities. As iAfrica’s Q&A Forum shows, Africans are eager to shape this future, asking sharp questions and sharing bold ideas.

Got more questions about AI in education? Drop them in our Q&A Forum and join the conversation shaping Africa’s tech-driven future.


Got more questions about AI in education? Drop them in an email to ai@africa.com and join the conversation shaping Africa’s tech-driven future.



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