Tuition Tussle: Unveiling the VAT Verdict in the Private School Fees Showdown in the case of "ALR and others v Chancellor of the Exchequer Case"

On June 13, 2025, the High Court of Justice in London handed down a landmark judgment in the case of ALR and Others v Chancellor of the Exchequer [2025] EWHC 1467 (Admin), a case that ignited fierce debate about the intersection of tax policy, education, and human rights. This legal challenge, brought by a group of claimants representing various interest groups sought to overturn a controversial provision in the Finance Act 2025 that imposed VAT on private school fees.

The Challenge

The roots of this case lie in the UK Government’s decision, enacted through sections 47-48 of the Finance Act 2025, to remove the long-standing VAT exemption for private school fees. This policy change meant that private schools would now have to charge 20% VAT on their fees, a move that sparked immediate backlash from parents, independent schools, and educational organisations. The claimants, a diverse group including children (represented by litigation friends), parents, and institutions like Emmanuel School (Derby) Limited and Wyclif Independent Christian School, argued that this new tax infringed upon their rights under the European Convention on Human Rights (ECHR).

Specifically, the claimants contended that the VAT imposition violated Article 2 of Protocol 1 (A2P1), which guarantees the right to education, either on its own or in conjunction with Article 14, which is the prohibition on discrimination. Their argument was that the additional financial burden of VAT would make private education unaffordable for many families, effectively denying children access to their chosen schools - particularly those catering to special educational needs or religious preferences. They sought a declaration of incompatibility under section 4 of the Human Rights Act 1998 (HRA), which would deem the VAT provisions unlawful and prompt parliamentary reconsideration.

The Journey Through the Courts

Three related claims were consolidated for a rolled-up hearing in the Administrative Court. Claimants, represented by prominent barristers including Lord Pannick KC, faced the Chancellor of the Exchequer, with HMRC and the Speaker of the House of Commons as interested parties. The UK Government’s legal team, led by Sir James Eadie KC, defended the VAT policy as a legitimate fiscal exercise.

Hearings took place on April 1-3 and April 14, 2025, with additional written submissions shaping the arguments. The claimants’ anonymity, particularly for the children involved, was a priority, with multiple court orders ensuring their identities were protected. These orders underscored the sensitive nature of the case, as the children’s educational circumstances were central to the claims.

The Divisional Court, presided over by Dame Victoria Sharp, Lord Justice Newey, and Mr Justice Chamberlain, faced a complex task: balancing the government’s right to implement tax policy against the claimants’ assertions that the policy infringed fundamental rights.

What Was Sought?

The claimants’ demands were clear and ambitious. They sought:

A Declaration of Incompatibility

Under section 4 of the Human Rights Act 1998, they asked the court to declare that sections 47-48 of the Finance Act 2025 were incompatible with A2P1 and Article 14 of the ECHR.

Protection of Educational Access

The claimants argued that the VAT imposition disproportionately affected families relying on private schools, particularly those with children who had special educational needs or who attended schools aligned with specific religious or philosophical convictions.

Judicial Review

The claims were framed as a judicial review, challenging the lawfulness of the government’s decision to impose VAT on private school fees and seeking to halt its implementation.

A successful challenge could have forced the UK Government to rethink its tax policy, potentially preserving the VAT exemption and alleviating financial pressures on private school families.

The Judgment: Key Findings

On June 13, 2025, the Divisional Court delivered its verdict, dismissing the claimants’ challenges in their entirety. Whilst the judges found that some of the claimants' human rights had been interfered with, they noted that the UK Government had a "broad margin of discretion" in determining how to balance the interests of the claimants against the interest of others who "may gain from public provision funded by the money it will raise". Here are the main findings:

No Violation of the Right to Education (A2P1)

The court overall rejected the argument that the VAT imposition breached A2P1. It held that A2P1 guarantees access to education but does not entitle individuals to education at a specific type of institution, such as a private school. The judges emphasised that the state’s obligation is to ensure a functional education system, not to subsidise private choices through tax exemptions. The VAT policy, while increasing costs, did not deny access to education as a whole, as state schools remained available.

No Discrimination Under Article 14

The claimants’ argument that the VAT policy was discriminatory - disproportionately affecting families with children in private schools - was also dismissed. The court found that the policy applied uniformly to all private schools and did not target specific groups based on protected characteristics. Any financial hardship, the court reasoned, was a consequence of economic policy, not discriminatory intent or effect within the scope of Article 14.

Legitimate Fiscal Policy

The court upheld the government’s right to impose VAT as a legitimate exercise of its authority to raise revenue. The court found no evidence that the VAT imposition was arbitrary or disproportionate.

No Declaration of Incompatibility

Given the findings on A2P1 and Article 14, the court declined to issue a declaration of incompatibility under the Human Rights Act 1998. The Finance Act 2025’s provisions were deemed lawful and consistent with the UK’s human rights obligations.

The Aftermath and Broader Implications

This decision, whilst not unexpected by many legal commentators, sent ripples through the education sector and beyond. For private schools, the ruling confirmed that VAT would now be a permanent fixture, likely leading to higher fees and financial strain for some families.

The case highlighted the challenges of using human rights law to contest tax policy in the context of very few challenges having succeeded. The court emphasised that many of the arguments presented were issues to be considered by Parliament rather than the judiciary. The court’s deference to the UK Government’s fiscal decision-making underscored the high bar for such challenges, particularly when they involve broad economic policies rather than targeted discrimination. This challenge has reaffirmed the UK Government’s power to reshape the financial landscape of education through taxation, while leaving open broader questions about how society balances individual choice, economic equity, and the right to education. For now, the VAT on private school fees is here to stay, but the conversation it sparked is far from over.