Lords Vote Against Ending Tax Relief for Private Schools, Citing Impact on SEND Pupils

Baroness Diana Barran said she does not believe ‘that the long-standing tradition that education should be free from taxation should be broken.’

School children during a Year 5 class at a primary school in Yorkshire, England, on Nov. 27, 2019. Danny Lawson/PA Wire

The Lords have voted against ending the tax relief for independent schools in England, citing the impact on pupils with special education needs and disabilities (SEND) among its reasons.

On Tuesday, peers voted 232 to 141—a majority of 91—in favour of an amendment to the Non-Domestic (Multipliers and Private Schools) Bill, removing Clause 5, which aimed to end charitable tax relief for independent schools.

The Labour government had proposed ending the 80 percent discount on business rates for independent schools registered as charities, with the change set to take effect from April 1, 2025.

The amendment was sponsored by shadow education minister Baroness Diana Barran and Liberal Democrat peer Lord Michael Storey.

Tabling the amendment, Barran said she and Storey “do not believe that the long-standing tradition that education should be free from taxation should be broken.”

“Clearly, the government do not agree with us, and we have seen this with the egregious introduction of VAT on independent schools fees and now with the proposed change in this bill,” she said.

The efforts to end tax relief comes after the government introduced 20 percent VAT on private school tuition and boarding fees, which came into effect on Jan. 1, 2025.

These tax rises are intended to generate revenue to put back into state school education, paying for initiatives such as recruiting 6,500 new teachers, expanding early years provision, and introducing mental health support in every school.

100,000 Pupils Without EHCPs

There are 2,444 private schools in England, of which 1,139 are charities. The government predicts that 1,040 independent schools in total will lose business rates charitable relief—43 percent of all independent schools and 91 percent of all those which are registered charities.

The government has previously said that private schools which are mostly concerned with teaching of SEND pupils with an EHCP will retain their charitable rates relief.

However, peers argued that this would still impact schools where many children with SEND do not have education, health, and care plans (EHCPs).

Lord Kevin Shinkwin, who lives with the genetic condition osteogenesis imperfecta—also known as brittle bone disease—said leaving Clause 5 out of the bill “is the only way to protect all pupils with SEND who attend independent schools, like those I attended, where the proportion of children with SEND is much lower than 50%.”

The Conservative peer said the “inconvenient truth” is that almost 100,000 pupils are receiving SEND support at private schools without EHCPs.

According to the latest data from the Department for Education, over 1.67 million pupils at state and private schools in England receive special educational needs support, of which 434,354 have EHC plans. A further 1,238,851 receive special needs support but do not have an EHC plan, of which 98,969 are in independent schools.

SEND Children ‘Expendable’

Shinkwin said: “The sad fact is that, in the government’s eyes, the damage to many of these children’s life chances seems to be a price worth paying.

“They are expendable, immaterial, inconsequential, collateral damage, caught in the crossfire of what appears to be an ideological obsession with punishing anyone they perceive as rich.”

File photo of school children during class at a primary school in Yorkshire, England, on Nov. 27, 2019. Danny Lawson/PA Wire

The peer said the plans were “deeply damaging and wholly disproportionate,” and like other colleagues in the upper house, argued that the measures will not raise significant revenue to cover public education spending costs.

Instead, it “will harm schools and particularly pupils with SEND who, as I did, come from modest backgrounds. Their life changes will be badly affected by its implementation.”

Funding Needs to Be Paid For

Responding on behalf of the government, Lord Wajid Khan of Burnley reiterated that under the carve-out in the bill,  schools which wholly cater to children with EHCPs would be exempt.

Khan said Labour had committed in its manifest to raise school standards, and “as part of that, the government committed to removing the VAT and business rates charitable relief tax breaks for private schools, to help to raise revenue to help to deliver on their commitments to education and young people.”

In the budget, the government announced an increase in per-pupil finding, with a £2.3 billion increase to the core schools budget, including an almost £1 billion uplift in high-needs funding.

“This funding increase needs to be paid for,” the minister said, continuing that the end of tax relief and introduction of VAT combined will raise around £1.8 billion a year by 2029/30.

The bill is currently in its Third Reading in the House of Lords, after which it will return to the House of Commons where any amendments made in the upper house will be considered. The bill may go back and forth between the two chambers until lawmakers agree on the wording of the bill, before it receives Royal Assent and becomes law.