Budget rules mean private schools VAT raid won’t start before Sept 2025, Labour insiders claim

Parents face uncertainty about when Labour's VAT charges would apply to their children's schools
Parents face uncertainty about when Labour's VAT charges would apply to their children's schools - Elva Etienne/Alamy Stock Photo

Labour’s private school tax raid would not kick in until Sept 2025 at the earliest, party insiders have insisted after Rachel Reeves said it would be in her first Budget.

The Labour Party has pledged to charge VAT on private school fees if it wins the general election on July 4, in a policy that has drawn fierce criticism.

But exactly when the change would be applied under a Labour government has been unclear, meaning uncertainty for parents ahead of the 2024/25 academic year.

Ms Reeves said on Thursday that the changes would be in her first Budget. That would be in Sept at the earliest because independent forecasters must be given 10 weeks’ notice.

It means that the changes would be formally introduced in parliament around the same time that children were already starting the 2024/25 academic year.

Labour insiders working on the policy insist that means the tax rise will not be applied this coming academic year, so the earliest it would come in is for the 2025/26 year.

Despite the claims, tax experts have warned that Labour could apply the VAT raid to this academic year if they wanted.

The Conservatives jumped on the development, claiming Labour would raise less money than claimed if the private school tax change does not happen in its first year in office.

A Tory source told The Telegraph: “There are now serious questions for Labour. If they are delaying one of their flagship revenue raisers it means the money for their spending has to come from somewhere else. They have to come clean with the British people about what new taxes they will be imposing on people instead.”

Committed to the policy

Ms Reeves told the Times CEO Summit that the private schools tax increase would not be applied “retrospectively” and would be included in her first Budget after a Labour victory.

She said the party was committed to the policy because “the children who are struggling most are in state schools - young people are not getting the chance to fulfil their potential”.

Ms Reeves urged private schools to start bracing for the extra 20 per cent levy if Labour wins the general election.

She said: “Over the last 14 years state schools have to make huge efficiencies because of the cuts to real-terms funding over the last few years and I strongly believe that private schools as well will be able to make efficiencies.”

Rishi Sunak, who was educated at the private school Winchester College, attacked Labour’s private schools policy in an interview this week.

‘Aspirational country’

The Prime Minister told the Daily Mail: “People like my parents are the people who will be most affected by Labour’s change. People who are working hard, who are aspiring to provide a better life for their kids. They are the people that will lose out.

“I believe in an aspirational country, I believe if you’re working hard and you want to provide a better life for your family, then any government I lead will be on your side. Whether you want to send your kids to a private school, if you want to buy your first home as a young couple. Whether you want to set up a small business on your own or set up in self-employment, which I think is something to be admired.

“Those are all things that speak to the type of country that we are in that I want to support.”

Earlier in the week privately-educated Labour frontbenchers were accused of hypocrisy over the party’s plans to impose VAT on fee-paying schools.

Nearly 25 per cent of the shadow cabinet attended private schools compared with seven per cent of children whose parents pay for their education.

They include Hilary Benn, Thangam Debbonaire, Louise Haigh and Anneliese Dodds, chairman of the Labour Party.

John Healey, the shadow defence secretary, Alan Campbell, opposition chief whip in the Commons, and David Lammy, the shadow foreign secretary, were also privately educated.