Adding VAT to private school fees could raise “very little” new revenue if a quarter of pupils leave the independent school sector, a think tank has said.
Forcing private schools to charge VAT on their fees is likely to have the least impact on the most expensive schools and the wealthiest parents, according to education think tank EDSK.
It comes after the Labour Party has said it would end the tax breaks enjoyed by private schools, most of which have charitable status, giving them at least 80% relief on business rates.
In September 2021, the party said a Labour government would end the charitable status of England’s private schools, raising an estimated £1.6 billion from VAT and £100 million from business rates.
But the research paper from the think tank finds that charging VAT on private school fees is likely to raise far less than £1.6 billion a year.
It claims that the calculations behind the £1.6 billion figure do not take into account a drop-off in demand for private schools if VAT is added to fees – which would require extra spending to educate these pupils in state schools.
