Ending tax breaks for private schools could raise up to £1.5bn

Labour Party proposals to remove tax breaks for private schools including exemptions from VAT and relief on business rates would raise tax revenues by about £1.6bn according to a report from the Institute for Fiscal Studies (IFS). With a small movement of pupils into the state sector costing perhaps £100m to £300m a year this would lead to a net gain to the public finances of between £1.3bn and £1.5bn.

The report suggests that putting VAT on private school fees would have a relatively limited effect on numbers attending private schools – perhaps a reduction of 3% to 7%. Even that reduction would have ‘limited impact on tax revenues’ as money not spent on school fees would be likely to be spent on other goods and services on which VAT would be payable.