According to a leaked source, the Labour government plans to introduce VAT on private school fees to pay for free meals for all primary school pupils. But isn’t this clearly illegal under EU law?

The EU council directive on VAT Article 132, section I and J says:

Member States shall exempt the following transactions:


(i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;

(j) tuition given privately by teachers and covering school or university education;

  • Given that EU Directives require domestic legislation to become law, as far as I can tell, this is implemented as part of the VAT Act 1994, here Nov 19, 2019 at 10:25
  • I've added an answer, but I'm uncomfortable with it. Wait for tonight's debate and next week's manifestos to find out the real policy, not the leaks.
    – Jontia
    Nov 19, 2019 at 11:05
  • What do you mean by "used to pay for"? To directly redirect those funds, or do you mean strictly in the accounting sense?
    – bobsburner
    Nov 19, 2019 at 11:10
  • @bobsburner it's now a common political practice to link proposed taxes to proposed expenditure
    – Caleth
    Nov 19, 2019 at 19:15
  • @Caleth That's not even a new thing. (I forgot to mention "in the PR/campaign sense" in my comment)
    – bobsburner
    Nov 20, 2019 at 9:42

2 Answers 2


It really is too early for this question as the Labour Manifesto hasn't been published yet so any previous position is subject to change.

Labour's proposals at their Conference in September actually went much further than this; Guardian Conference Report

Labour delegates have endorsed radical plans that would abolish private schools by removing their charitable status and redistributing their endowments, investments and properties to the state sector.

Interestingly this article makes no mention of VAT, and I notice the question doesn't provide any source for the VAT claim. Here's a leaked source for the VAT claim, Labour have declined to comment.

Labour's policy appears to be to remove tax exceptions for Private schools, they'll remove charitable status for these schools, causing their business rates to rise, stopping them being able to re-claim income tax on donations and a number of other tax efficient measures.

But in all honesty, wait for a week and find out the real policy.

  • There is also the presumption (certainly on the part of Labour's leadership) that the UK is leaving the EU, which would make the matter moot. This, of course, notwithstanding their pledge to hold a referendum between whatever withdrawal agreement they can make with the EU and remaining. Nov 19, 2019 at 13:36
  • 1
    @GeoffAtkins not necessarily. The manifesto pledge in the link is from 2017. Labour stood on a commitment to leave the EU with no further discussion in 2017. So in working on the assumption of being out of the EU made sense. Now in 2019 they might be working on very different assumptions, which again, is a good reason to wait a week or so for the actual manifestos.
    – Jontia
    Nov 19, 2019 at 14:31

The Labour manifesto and it's accompanying funding document 'Funding Real Change' has now been published.

Contrary to my previous answer, and the simple policy details in the manifesto, it seems that the Labour party do intend to charge VAT on private school fees.

Page 2; Additional revenue raising measures

Other Reverse cuts to inheritance tax and Bank Levy, impose VAT on private school fees, scrap Married Persons Allowance, introduce a second homes tax 5.2

Page 13; Additional places required as a result of VAT on private school fees

This assumes that the full cost of the VAT is added to school fees with no reduction in pre-tax fees and that all of the pupils affected move into the English state system rather than being schooled elsewhere. If either of these were untrue, the cost would be lower

Page 39; VAT on private school fees

According to the Oxford Economics report ‘The Impact of Independent Schools on the UK Economy’, Independent Schools Council schools received £7.83bn for “core school operations” in 2017. Applying the same assumptions on elasticity of demand as in our funding for new state school places (Section 2) suggests a reduction in tax base to around £7.4bn and therefore a potential tax yield of just under £1.5bn.

As VAT-payers, private schools would be able to reclaim VAT on VAT-able expenses, but most outgoings relate to staff. Figure 11 of the Oxford Economics report suggests £189m of taxes on school purchases were paid, which is an upper bound on the VAT that could be reclaimed. Deducting that and adjusting upwards for the fact that only 85% of independent schools are ISC schools gives a potential yield just over £1.5bn for 2017 which is adjusted for school fee inflation in 2018 and 2019 and inflation forecasts going forwards

There is no indication of how this policy interacts with EU law. So while I'm aware I'm not really answering the question, it seemed important to confirm that this is a genuine policy position.

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