An analysis has revealed that Labour’s plan to charge VAT on private school fees may generate significantly less revenue than previously estimated. The Mail has the story.
Prior to the General Election, Sir Keir Starmer vowed to end tax breaks for private schools in order to fund a series of manifesto pledges.
This included the recruitment of 6,500 extra teachers in the state sector, among other measures such as providing 3,000 new nurseries.
The Institute for Fiscal Studies previously estimated that removing tax exemptions from private schools would raise about £1.6 billion a year in extra tax revenue.
But, according to the Sunday Times, research by HMRC in January showed – in the most extreme case – the policy would bring in far less. …
Data from the Independent Schools Council’s 2023 census found there were 554,316 pupils at private schools in the U.K., representing about 5.9% of all pupils.
Under their worst-case scenario, HMRC planned for 17% of private pupils, about 94,000, moving to state schools.
This would see the policy of removing tax exemptions for private schools raise just £650 million in extra revenue in 2025-26 because of the added cost of funding children in the state system.
In a second scenario, HMRC calculated that if 11% of pupils moved to state education, about 60,000, the policy would raise £900 million.
A 5% shift of privately educated pupils to the state sector, about 28,000 pupils, would raise £1.15 billion.
Worth reading in full.
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