Ralph Riddiough

VAT at the standard rate of 20 per cent will be added to private school fees from 1 January 2025. The government said the tax would apply to all payments for the January term made from 29 July 2024 onwards.

A legal challenge to that decision has been brought by the Scottish Council of Independent Schools (SCIS) on behalf of parents and is expected to highlight specific concerns from Scottish private schools.

Hoping for a judicial review of the government’s policy, the challenge will focus on claims of breaches of the European Convention on Human Rights. The action will be brought around Article 14, the prohibition of discrimination, and Article 2 of the First Protocol, the right to education.

The group says its legal claimants will be parents who argue they cannot find an alternative education for their children in the state sector and are likely to include families with children with special educational needs.

Commenting on the challenge, Holmes Mackillop director Ralph Riddiough said: “My understanding is that the argument to be made by the legal claimants will be that it is the right of parents to choose their children’s education.

“This feels like a policy aspiration rather than a human right.

“Local authorities in Scotland have a duty to secure that there is made for their area adequate and efficient provision of school education. This includes provision for special educational needs.

“Where a local authority cannot make this provision itself, so that children must be taught at an independent school, it seems likely that these fees will be exempt from VAT, but we will await further details of the legislation as it comes forward.”

Rather than wait for the outcome of this challenge from SCIS, Mr Riddiough advises private schools in Scotland and parents of pupils in these schools to take steps now to adapt to the new VAT regime on the working assumption that it will proceed.

He noted that HMRC has advised that, once registered for VAT, independent schools will be able to claim back the tax they have paid on capital projects such as buildings and land acquisition completed over the past decade.

“This means that some private schools could be in line for financial windfalls, and they would be advised to seek expert advice in this regard,” he said.

“Similarly, the provision for school fees is a perennial topic in inheritance tax planning for grandparents, and I would urge anyone responsible for private school fees to seek exigent professional advice.”