Summary  5

1 VAT on school fees  7

1.1 How does VAT work?  7

1.2 How have school fees been treated for the purpose of VAT?  8

2 The government's proposal to introduce VAT on school fees  11

2.1 The Labour Party's policy on VAT and school fees  11

Manifesto commitments and parliamentary debate  11

Analysis of the potential impact of extending VAT on school fees  12

2.2 The Labour government's consultation (July 2024)  14

Publication of the Treasury's technical note  14

The approach to extending VAT on school fees  16

Date of implementation and treatment of prepaid fees  17

Pupils with special educational needs  19

The treatment of bursaries  20

Discussion of the impact on fees and school choices  21

The European Convention on Human Rights  23

3 2024 Autumn Budget  28

3.1 The Chancellor's Budget statement  28

The Office for Budget Responsibility's assessment  29

3.2 HMRC's impact assessment  30

Proposed revisions to the law  31

Assessment of impacts  32

3.3 The government's response to its consultation  35

Amendments to be made to the legislation  35

Small faith schools, international schools, performing arts schools  37

Special educational needs and disabilities  39

3.4 Finance Bill 2024-25  40

VAT on private school fees

Second reading  40

Committee of the Whole House  42

Remaining stages of the Finance Bill  44

4 Recent developments  46

4.1 Statistics on the number of independent schools and pupils  46

Department for Education (DfE) data for England  46

Larger changes in boarding pupil numbers  47

Number of pupils in transition years  48

Explaining changes in pupil numbers  49

Explaining changes in pupil numbers  49

Number of schools  49

4.2 Independent Schools Council (ISC) census data  51

4.3 Further debate  52