The VAT Private School Fees Policy: Implications for Socio-Economic Mobility in the UK

Abstract

The UK's 2025 policy to impose a 20% VAT on private school fees aims to improve state education equity through revenue redistribution. This article evaluates its potential to inadvertently hinder socio-economic mobility. Economic analysis suggests the policy is fiscally precarious: projected revenues are likely to be offset by the costs of accommodating pupils migrating to the state sector. Furthermore, the burden will fall disproportionately on price-sensitive middle-income families, potentially stratifying private education access. Concurrently, increased demand for high-performing state schools may inflate house prices in premium catchment areas, advantaging wealthier households. The risk of private school closures also introduces negative local economic externalities. We conclude that without precise calibration, the policy may fail its equity objectives, instead reinforcing existing inequalities and functioning as a blunt instrument of fiscal policy.