PolicyLens

Conservative - Education tax

Remove VAT from private-school fees

Reverse the 20 percent VAT charge on private-school education and boarding services.

Last updated: May 2026.

Read the policy-specific methodology note

Tax baseline

Private-school education and boarding services have been subject to 20 percent VAT from January 2025. Reversal removes that revenue but may reduce movement from private to state schools.

  • Direct beneficiaries are fee-paying households.
  • Schools may retain part of the cut.
  • State-school displacement savings are uncertain.

Core trade-offs

Parents and private schools gain from lower fees or higher margins. The Exchequer loses VAT revenue, while any saving from fewer pupils moving to state schools depends on actual migration.

  • Fee-paying households gain most directly.
  • Treasury loses tax receipts.
  • State-school pressure may ease modestly.

Fiscal impact by 2028-29

+GBP 1.0bn to +GBP 3.0bn. Central estimate: +GBP 1.8bn.

  • Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
  • Main cost is lost VAT receipts.
  • Fewer state-school transfers may offset part of the cost.
  • Pass-through and pupil movement are uncertain.
  • This is not an official costing.

Economic impact by 2028-29

  • Jobs: Private-school employment may be supported; state-sector demand may ease slightly.
  • Wages: No broad wage effect; private-school staff may benefit if margins improve.
  • Prices: Fees likely fall less than the full VAT amount if schools retain margins.
  • GDP / productivity: Small direct GDP effect; distributional impact favours higher-income households.

Assessment

Reversal would reduce private-school fees or support school finances, but the direct fiscal cost is material and gains mostly accrue to higher-income households. The offset from fewer pupils entering state schools is uncertain.

Confidence: Medium-low. The VAT baseline is clear; incidence between parents and schools is uncertain.

Main risks

  • Regressive gains: Fee-paying households receive most of the direct cash benefit.
  • Pass-through uncertainty: Schools may not pass the full VAT cut to parents.
  • Revenue loss: State-school savings may be smaller than lost VAT receipts.

Safeguards

  • Publish pass-through monitoring by fee level.
  • Separate SEND and small-school effects.
  • Score state-school displacement transparently.

Academic evidence

Benzarti, Carloni, Harju and Kosonen, Quarterly Journal of Economics, 2020

VAT incidence asymmetry

VAT rises and cuts need not pass through symmetrically to consumer prices.

Relevant to household energy VAT and private-school-fee VAT reversals.

What Goes Up May Not Come Down (2020)

Epple, Romano and Urquiola, Journal of Economic Literature, 2017

Private-school market effects

School-choice policies can alter sorting, peer groups and public-private school equilibria.

Relevant to VAT changes that affect private-school demand.

School Vouchers: A Survey of the Economics Literature (2017)

UK government evidence

HM Treasury and HMRC, 2024

Private school VAT note

The government applied 20% VAT to private-school education and boarding from January 2025.

Defines the tax to be reversed.

Applying VAT to private school fees (2024)

House of Commons Library, 2026

Private-school VAT briefing

The briefing summarises the VAT policy, its rationale and Parliament's scrutiny of impacts.

Provides implementation context beyond the tax note.

VAT on private school fees (2026)

Sources

Other Conservative policies

PolicyLens estimates are illustrative and should not be treated as official costings.