Why it matters: The ruling allows Labour's controversial 20 per cent VAT charge on private school fees to continue, affecting thousands of hard-working local families.
The big picture: Six families, supported by the Independent Schools Council representing over 1,400 schools, had sought a declaration that the tax was incompatible with human rights law. They argued it caused unnecessary harm to children with special educational needs, religious requirements, or those needing single-sex environments due to previous abuse.
Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain delivered their 94-page decision acknowledging the legislation does interfere with some human rights. However, they ruled the government has a "broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise".
The details: During April hearings, Lord David Pannick KC argued the law applies "irrespective" of family need, affecting children whose requirements are not met by state schools.
Sir James Eadie KC, representing the Treasury, highlighted that abolishing the VAT exemption was a prominent Labour manifesto pledge expected to yield between £1.5bn and £1.7bn annually – although this is widely disputed.
The government estimates the tax will fund 6,500 new teachers for state schools by 2029-30.
Treasury predictions suggest 35,000 pupils will move to state schools "in the long-term steady state", with a further 2,000 leaving the system entirely.
The other side: Private school pupil numbers in England have already fallen by more than 11,000, from 593,500 in January 2024 to around 582,500 in January 2025. Average fees have risen 22.6 per cent in the past year to more than £22,000 annually – significantly higher than the Treasury's predicted 10 per cent increase.
Abigail Trencher, Head of Education at Birketts LLP, said: "This outcome will be a big blow to independent schools, which had been hoping that the judgement would offer welcome relief from the financial turbulence that has been unleashed across the sector."
She noted the sector has faced "a hat-trick of fiscal bullets" including loss of charitable business rates relief, VAT removal, and increased employer National Insurance contributions.
"The claims have, however, highlighted the depth of feeling on this issue, the impact the change in VAT has had, and will have, on children with special needs and from faith backgrounds," Trencher added.
The bottom line: Despite legal challenges highlighting concerns about vulnerable children, the courts have given the government's education funding priorities the green light, potentially reshaping the UK's independent school landscape.
