Private school leaders have warned that the UK government’s VAT policy on school fees could harm pupils with special educational needs and disabilities (SEND), even if they are technically exempt from the tax.
In recent years, growing pressure on state school provision has led more parents to send their children with SEND to independent schools to access the support they need. However, education leaders fear that some of these children could be forced back into the state system if their private schools close due to financial strain caused by the new tax policy.
The Labour government introduced the policy in January 2025, removing tax exemptions from private schools and applying 20% VAT to fees. The policy is part of Labour’s election manifesto and is expected to generate over £1.5 billion in the 2025–2026 financial year. The government says this revenue will be used to improve state schools.
The Treasury has confirmed that the VAT will not apply to pupils with an education, health and care plan (EHCP) if their place at a private school is funded by the local authority due to specialist needs. However, VAT will still apply if a local authority believes a mainstream private school can meet a child’s needs, even if the pupil has additional support requirements.
School leaders warn that these rules could have wider effects. Even SEND pupils exempt from VAT may be impacted if schools close due to falling enrolment and reduced income. They argue that this could remove vital education options for vulnerable children.
New figures from the Independent Schools Council (ISC) show a sharp increase in pupils with additional needs attending independent schools. According to the ISC’s latest census, the number rose from 66,026 in 2015 to 117,618 in 2025 — a 78% increase. The census, conducted in January 2025, surveyed 1,423 UK schools, most of them in England.
Data from the Department for Education shows a 48% increase in the total number of pupils with additional needs across all schools between 2015 and 2024, rising from 1.1 million to 1.7 million.
The ISC also reported a 5.8% rise in the number of pupils receiving SEND support in private schools in the last year alone, increasing from 111,154 to 117,618. In comparison, government data shows a 4.7% year-on-year increase in the state sector.
ISC General Secretary Julie Robinson expressed concern that the new tax could leave children with SEND without appropriate education options. “Many parents have assessed their options and chosen a local independent school so their child can receive support straight away,” she said. “Independent schools are a vital part of their community’s education ecosystem, especially for children with SEND.”
Robinson added that if schools close because of the policy, some pupils may be left without suitable support. “We are particularly worried about how this tax on education might impact local SEND provision,” she said.
Some independent schools have launched legal challenges against the government, arguing that the VAT policy is discriminatory and breaches human rights laws.
Kim Venables, headteacher of Salterford House School in Nottinghamshire, said her school has recently welcomed pupils who struggled in larger, mainstream state schools due to sensory needs. Her school, which includes a specialist SEND unit, currently has five pupils with EHCPs funded by the local authority.
Venables said the VAT policy is already affecting enrolment and retention. “It’s harder for people to make a commitment to independent education,” she said. “I’m concerned about what happens if schools like ours that support SEND pupils are forced to close. Where do these children go?”
Matthew Bryan, headteacher at Kingswood House School in Surrey, echoed these concerns. He said schools have seen a decline in attendance at open days and a drop in prospective families since the VAT was introduced.
Bryan added that more families are asking for financial support from schools to cope with the added cost, especially those with children who have additional needs. “But that’s not sustainable,” he said. “We need to keep our finances secure.”
He criticised the current system, saying it puts too much strain on both families and local authorities. “Either children are stuck in a mainstream state system that doesn’t meet their needs, or they get full support at high cost, which is bankrupting local authorities. Neither option is working well.”
The VAT policy remains controversial, as the debate continues over how to balance funding for state education with protecting vital support for children with SEND in all schools.
