LEICESTER, United Kingdom – Members of many religious schools in England are complaining that New Year’s celebrations are being cancelled to the imposition of a new Value Added Tax (VAT) on private schools in the country.

Unlike the United States, religious schools in the United Kingdom are usually state funded, however 20 percent of religious schools are private schools. Although the British people often think of private schools being like Eton or Harrow – famous “public schools” known for its wealthy and often upper-class students – most religious private schools have a much poorer clientele.

The new Labour Government – elected in July – says it was ending tax breaks on private schools “to improve standards and opportunities for the nine out of 10 children who attend state schools.”

“The money raised from VAT will fund public services, including education priorities for the next academic year,” the government said in a statement.

However, in addition to the increase in tuition fees, parents are complaining the imposition of the tax on January 1 – the middle of the school calendar – is an additional burden.

Caroline Farrow, a Catholic British journalist and commentator, says the way the new tax was implemented gave parents who would now no longer be able to afford the fees, “the unpalatable decision of whether or not to withdraw their children from independent schools, straight away, or midway through the academic year, causing them maximum disruption.”

“In addition to the stress of finding a school place at extremely short notice, many parents were faced with still having to pay for the Autumn term’s fees or loss of deposit, because independent schools contractually require at least a term’s notice of a child’s departure if it is outside of the natural leaving date,” she told Crux.

“Students in Years 9, 10 and 11 face significant difficulty finding school places in state schools, and official government advice published on local authority websites, is that students should not be transferring schools, especially during years 10 and 11, when they are studying for their GCSE public examinations,” Farrow added.

The General Certificate of Secondary Education (GCSE) is an academic qualification in a range of subjects and play the most significant role in a student’s advancement in education.

St. Joseph’s Preparatory School in Stoke-on-Trent announced it would shut for good at the end of 2024 due to the VAT rule.

“I hoped we would be able to get through it, but the introduction of VAT and the reduction of business rates is the straw that will break the camel’s back,” Headteacher Dan Hood told the BBC.

“We are not in a position to absorb 20 percent VAT increases; we have struggled as it is. I’ve got 22 staff that will now need to find a new job and I’ve got 70 children that need a new school. It is dreadful for all concerned,” he said.

Although religious private schools have asked for an exemption, the Labour Government says it will not lift the VAT for those schools.

Education Secretary Bridget Phillipson told ITV News there won’t be any exemptions “in this area because we have to raise money to invest in the state sector.”

“We’ve had a lot of scaremongering and bogus data from private school lobby groups over a number of years. We announced this policy some years ago, ahead of the election, we’d always been clear it was our intention to make this change,” she said.

Farrow said the VAT ruling will hurt students with special needs the most.

“My two youngest children both have complex autism; we applied for an EHCP for my son in May 2023 and have had to go through the appeals process twice, in order for it to be granted. Had we been able to afford it, we would have sent him to a local specialist independent school for boys with learning difficulties,” she told Crux.

“Had we done so, he would have got the help he needed, whereas now, he has begun to spiral as a result of being in a school that is constantly overwhelming, but we would also now be subject to an additional 20 percent in VAT. Our Local Authority does pay for children to attend this school, so parents paying themselves, are saving the state a considerable amount of money,” Farrow said.

She added many parents in our situation who have children with autism know that their children do not have time to spare and therefore choose to enroll them in independent education because it is easier than going through the EHCP process and it guarantees their children can access the support and environment they need in order to be able to learn.

“If your child attends a mainstream private school, but receives additional education related to their learning difficulty, such as literacy or numeracy support for dyslexia or dyscalculia, or targeted support to help them to help them identify trigger situations, strategies to cope and emotional regulation techniques, these too will now be subject to an additional 20 percent tax,” she said.

The full interview with Farrow follows.

Crux: On January 1, the new Labour government added a 20 percent Value Added Tax (VAT) to independent private schools. How has this affected students at these schools?

Farrow: The announcement that VAT would be imposed on school fees was made in July 2024, during the school summer holiday period. Although this policy had formed part of the Labour Party’s election manifesto, parents were caught off guard because of the extremely short notice period of 6 months and because the tax would begin to take effect in the middle of the school year.

This gave parents who would now no longer be able to afford the fees, the unpalatable decision of whether or not to withdraw their children from independent schools, straight away, or midway through the academic year, causing them maximum disruption. Parents therefore only had a few weeks to find a school place for their child; a task which was not made any easier given that all of the schools were closed, giving parents no opportunity to either view a prospective school or discuss their child’s needs with staff. Local Authority staff were also on holiday meaning that parents were also unable to discover which schools local to them may have places.

By contrast, when a previous Labour government phased out the assisted places scheme, whereby the state would pay for a place at an independent school for talented or bright children from a low-income background, they did at least do this in a way that allowed children who were already at the school to complete their education. There has been no similar accommodation made this time round. At the same time as introducing a tax on education, the government has also introduced a tax on vaping, but this is not going to take effect for 2 years to give the industry time to adjust. With 6 months’ notice, independent schools have been scrambling to implement the changes in time, many are yet to receive VAT numbers from the government and have had to acquire new accounting software and figure out which services may or may not be subject to VAT, and what, if anything they can reclaim.

In addition to the stress of finding a school place at extremely short notice, many parents were faced with still having to pay for the Autumn term’s fees or loss of deposit, because independent schools contractually require at least a term’s notice of a child’s departure if it is outside of the natural leaving date.

Students in Years 9, 10 and 11 face significant difficulty finding school places in state schools, and official government advice published on local authority websites, is that students should not be transferring schools, especially during years 10 and 11, when they are studying for their GCSE public examinations. Many schools will refuse to accept transfers because students will be faced with academic challenges with different exam boards and curriculums, and it is likely that their studies will significantly suffer. Additionally in many areas, such as Surrey, where I live and 20 percent of children are in independent education, there are no school places available, meaning that children will have to take transport (funded by the local authority) to another school over an hour away in a different county.

The government is relying on the fact that many parents such as myself will move heaven and earth not to subject their children to such unnecessary stress and will be forced to take extreme financial measures, such as taking a loan, or drastically cutting back their expenditure in order to keep their children in education.

It is too early to say what the effects of the policy have been so far, but it is fair to say that this will inflict additional stress on students whether they are forced through the traumatic experience of leaving their existing school, or the financial pressure that is being placed on their family. While we have done our best to cushion our children, they are very well aware that money is now in short supply and that as a result, we all need to make some difficult changes.

Why have independent private Catholic schools been especially affected by this new tax?

Many independent Catholic schools have been affected by these changes, because they are small schools running on a tight budget. The image that the general public has of independent schools is that they are all grand historic establishments, charging exorbitant fees and boasting state of the art facilities, such as performing arts suites, astroturf sports pitches and even horse-riding stables. While some schools are like this, many others are much smaller institutions with far humbler facilities, on a par with many state schools.

The reason that parents chose them is because they offer smaller classes and a much smaller staff-pupil ratio, meaning that pupils are able to get more individual attention and pastoral support. We chose independent education partly for this reason, but also because our children did not get places at our local state Catholic schools, so going independent was the only way to obtain Catholic education – my husband is a priest, the house is often busy and therefore home education was not a viable option for us.

It is very likely that smaller independent Catholic schools will be forced to close as a result of falling pupil numbers, leaving Catholic children without school places, let alone Catholic school places, as the state sector is often oversubscribed, and staff without jobs. Many of the smaller independent Catholic schools charge modest fees, but the 20 percent increase will drive many parents over-budget. In one local independent school, a Year 7 intake typically consists of 90-100 pupils; this year, it has dropped to 47.

The government claims that very few pupils will be affected by the addition of VAT on school fees, but crucially they do intend to complete any impact assessment or monitoring beyond the next 2-3 months. Realistically, we will begin to see the need for state school places to dramatically rise in the next 2-3 years as children complete their GCSEs, then switch to the state sector aged 16, for their A Levels. Similarly, parents with pupils currently in elementary or junior independent education, will likely transfer them to the state sector for their secondary education.

In common with all independent schools, Catholic schools will have to cut back on bursaries and scholarships that they offer to low-income students and put a halt to some of the charitable activities such as loaning facilities and staff to state schools. Some state school parents have reported that they can no longer send their children to swimming lessons held by private schools, because these are now also subject to the additional VAT.

It is not just the VAT that schools are coping with, the Chancellor also announced that independent schools are no longer to be perceived as charities and thus their business rate tax relief is being removed. Together with the increases in employers’ national insurance contributions announced in the budget, schools are coping with a ‘triple whammy’ effect.

You have been speaking about the reason parents of children with autism are especially hurt by this new tax. Why is this the case?

I’ve been speaking about how parents of children with autism are particularly affected by this change, because many of my children have the condition. One of my children who is in independent education is autistic but also extremely academically able and therefore needs to be in a mainstream environment. She is being very well supported by her Catholic independent school who are able to make the accommodations she needs to access the curriculum and who also give her a lot of pastoral care and support. One of her challenges is that she is very auditorily sensitive and easily overwhelmed by lots of people and noise. It is abundantly clear that she would not be able to manage in a local large mainstream mixed-sex comprehensive, with 30 people per class, and around 200 people in her year. She often finds her current school, which is under half the size, overwhelming.

Because she is performing well academically, she would not qualify for an Education Health and Care Plan (EHCP) which would outline the support she would need in a state mainstream school. The process for obtaining an EHCP is labyrinthine and complex, and takes on average around 2 years.

My two youngest children both have complex autism; we applied for an EHCP for my son in May 2023 and have had to go through the appeals process twice, in order for it to be granted. Had we been able to afford it, we would have sent him to a local specialist independent school for boys with learning difficulties. Had we done so, he would have got the help he needed, whereas now, he has begun to spiral as a result of being in a school that is constantly overwhelming, but we would also now be subject to an additional 20 percent in VAT. Our Local Authority does pay for children to attend this school, so parents paying themselves, are saving the state a considerable amount of money.

Many parents in our situation who have children with autism know that their children do not have time to spare and therefore choose to enroll them in independent education because it is easier than going through the EHCP process and it guarantees their children can access the support and environment they need in order to be able to learn. It is not about gaining any academic or social advantage, but merely about their children being able to gain their qualifications and the skills they need to get a job, in an environment where they can thrive. They have had no other viable option than to use independent education, which has often entailed massive sacrifice, and are now being clobbered for an additional 20 percent. The tax effectively amounts to a tax on the education of disabled children, which is why so many parents are speaking out.

If your child attends a mainstream private school, but receives additional education related to their learning difficulty, such as literacy or numeracy support for dyslexia or dyscalculia, or targeted support to help them to help them identify trigger situations, strategies to cope and emotional regulation techniques, these too will now be subject to an additional 20 percent tax.

Follow Charles Collins on X: @CharlesinRome