Taxing faith: The Court of Appeal’s VAT judgment and the future of Christian education.
(Photo: Getty/iStock)The Court of Appeal has delivered its much-anticipated judgment in the legal challenge to the decision of the UK Government to apply VAT to private school fees. The case has attracted significant national interest because of its potential impact on educational choice, parental rights, and authentic Christian education.
The proceedings arose from several consolidated judicial review claims, including actions brought by evangelical Christian schools, parents, and pupils, supported throughout by the Christian Legal Centre.
Following Friday’s ruling, which dismissed the claimants’ grounds of appeal, all of the CLC-supported Christian claimants have confirmed their intention to seek further appeal to the Supreme Court.
Legislative Background
The VAT measure originated in the Labour Party’s 2024 election manifesto, which pledged to end the long-standing VAT exemption for private school fees to raise revenue for state education. That commitment became policy through a July 2024 Technical Note and was given immediate provisional effect by a Budget Resolution passed on 6 November 2024. Parliament then enacted the change formally in sections 47–49 of the Finance Act 2025, applying VAT to private school fees from January 2025 onwards.
Procedural Posture
Among the two groups of claimants in the Appeal challenging the imposition of VAT on private school fees, the CLC supported Evangelical Christian claimants consisted of four low-cost Christian schools, several Christian parents, and their children.
These schools, including Emmanuel School (Derby), The Branch Christian School, The King’s School (Hampshire), and Wyclif Independent Christian School, exist specifically to provide an education rooted in Evangelical Christian doctrine and practice, with daily worship, an explicitly Christian curriculum, and ethos-driven staffing and governance. They serve families who, according to the evidence they put before the Court, have made significant personal and financial sacrifices to ensure their children receive an education aligned with their deeply held Christian faith which would be unavailable within the state system because of the nature of education regulation.
Their case was that VAT would greatly worsen the financial challenges faced by schools that are already operating on narrow margins, particularly those charging relatively modest fees and supplementing income through donations. Some schools were already close to the VAT registration threshold, had frozen expansion plans, or anticipated that the new tax would force them to close. Parents likewise gave evidence that the fee increases caused by VAT would make continued attendance impossible, thereby depriving their children of access to an education aligned with their Christian convictions.
Following earlier High Court proceedings, the matter progressed to the appellate stage, where the claimants sought reconsideration of whether the measure was lawfully introduced and whether its impact on schools, families, and pupils was properly assessed. The Court of Appeal was therefore being asked to determine both the legality of the Government’s use of provisional taxation powers and the compatibility of the VAT policy with fundamental rights protections guaranteed by the European Convention on Human Rights.
In granting permission to appeal on all eight grounds of appeal on the 13th October 2024, Lewis LJ found that: “the nature of the issues raised in this case give rise to compelling reason why the appeal should proceed.”
Evidence of Harm
The evidence before the Court of Appeal showed that the VAT measure is already contributing to school closures and threatening the viability of others. For example, Alton School, a Catholic school in Hampshire educating around 370 pupils, announced it would close after trustees concluded that declining enrolment, accelerated by the anticipated VAT charge which could have added thousands of pounds to annual fees, had rendered the school financially unviable.
Similarly, Carrdus School in Banbury warned it would likely close after parents began withdrawing pupils when VAT, together with other tax increases, left families unable to meet higher fees, with governors confirming that the policy left many parents with no alternative but to remove their children.
Cedars School in Greenock, which had provided Christian education for 25 years, confirmed its permanent closure after determining that it could not absorb the cost of VAT increases, despite parents raising over £50,000 in emergency fundraising, and citing the tax change as a decisive additional pressure on already tight finances.
The planned closure of Immanuel College Prep School in Hertfordshire provides a further example, with governors identifying VAT and associated financial pressures as key drivers behind proposals to shut the school.
Taken together, these examples demonstrate a pattern whereby the VAT policy is accelerating declining pupil numbers, undermining financial sustainability, and forcing the closure or consolidation of faith-based schools, with significant disruption to pupils, families and staff.
One of the Claimants in the Court of Appeal case, The King Alfred School in Lower Gornal, has already been forced to close as a result of the government’s measures. Since VAT was applied, many families informed school leaders they could no longer afford the increased fees, leading to withdrawals and a disappointing uptake in enrolment that undermined the school’s viability.
Founders of the school cited not only the VAT imposition but also rising rents and other cost pressures as factors that compounded the financial crisis, forcing the difficult decision to close despite fundraising efforts and attempts to attract new pupils. The closure of The King Alfred School illustrates the real-world impact of the policy on institutions that serve lower- and middle-income families and highlights the broader risk to educational choice and community provision if similar schools cannot remain financially sustainable.
The Arguments on Appeal
The appeal argued that the Government’s decision to impose VAT on private school fees unlawfully interferes with fundamental rights protected under the European Convention on Human Rights, in particular Article 2 of Protocol 1 (the right to education and the duty to respect parents’ religious and philosophical convictions), Article 1 of Protocol 1 (protection of property rights affecting the ability of schools to operate and parents to access chosen education), and Article 14 (protection against discrimination when those rights are engaged).
The claimants contend that the policy disproportionately affects Christian faith schools because they exist to provide education that is explicitly shaped by religious ethos, which families cannot realistically replicate within the state sector. Once faith schools move into the state system or lose financial viability, they become subject to statutory requirements that significantly restrict ethos-based freedoms that private faith schools currently enjoy, including limitations on admissions policies, staff recruitment based on religious commitment, the organisation of collective worship, and the delivery of a curriculum grounded in religious teaching.
The claimants argued that, taken together, these restrictions mean that the VAT policy risks effectively removing meaningful access to education consistent with the religious convictions of many families.
The appeal further argued that the VAT policy is unlawful because it imposes a disproportionate and excessive financial burden on schools and families, contrary to the requirement that any interference with Convention rights must strike a fair balance between public policy objectives and individual rights.
The claimants contend that the Government has failed to demonstrate a rational or evidence-based link between the VAT measure and its stated aim of improving state education funding, particularly given evidence that pupils are already being withdrawn from private schools and that school closures are occurring or are anticipated. The appeal also challenged the manner in which the policy was introduced, highlighting that VAT was given immediate provisional effect under the Provisional Collection of Taxes Act 1968 before full Parliamentary scrutiny, and without transitional protections for pupils already enrolled.
The claimants argue that this sudden implementation has created significant disruption for families, particularly for pupils in examination years or those with special educational needs who may struggle to secure appropriate alternative placements, and that less intrusive alternatives were not properly considered.
The Judgment
While the Court of Appeal acknowledged the seriousness of the impact on low-cost religious schools and the genuine faith-based objections families had to state schooling, the Court undertook its own fresh proportionality assessment, as required by Shvidler v. Secretary of State for Foreign, Commonwealth and Development Affairs [2025] UKSC 30, given the national significance and novelty of the legislation. It accepted that the measure interfered with the claimants’ rights under Article 2 of Protocol 1 and engaged Article 14 but concluded that the VAT regime was nonetheless objectively justified.
The Court found that the Government had demonstrated a sufficiently important aim, that being the raising of revenue for education; and that the absence of exemptions for low-cost or faith schools was proportionate.
The Court accepted the Government’s position that creating an exemption for low-fee faith schools would generate unfairness between schools just above and below any threshold, distort market behaviour, incentivise avoidance through artificial “donations,” impose significant administrative burdens on HMRC, and reduce revenue by an estimated £30 million annually.
The Court emphasised that although the measure would, in practice, force some children to leave their religious schools, and could threaten the viability of certain Evangelical Christian or other faith-based schools, parents still retained access to state education or home education, meaning the “essence” of the right to education under Article 2 Protocol 1 was not impaired. It reaffirmed that the Convention jurisprudence does not guarantee a right to education in accordance with one’s religious convictions where such provision is not offered by the state.
The Court further dismissed the Christian claimants’ contention that imposing VAT on religious schooling interfered with their property rights under Article 1 Protocol 1, a conclusion reached only by narrowing “possessions” to exclude the very real loss of income and viability facing low-cost faith schools, and by relying on the UK’s politically-driven repeal of the former EU-wide prohibition on taxing private education.
It likewise dismissed the claim that the VAT regime unlawfully discriminated against faith-based schools, holding that even if a disproportionate impact had been shown, the Government had provided an objective justification, namely, the revenue-raising purpose of the policy, which is a defence to indirect discrimination under Article 14. In conclusion, the Court accepted the Divisional Court’s result (though not all of its reasoning) and upheld the legality of the VAT measure.
What the Court of Appeal got Wrong
The court’s reasoning is unconvincing for several reasons. First, while home education is legally available, it is not a realistic alternative for many families. Educating a child at home often requires one parent to forgo paid employment or significantly reduce working hours, a sacrifice that is simply not possible for households already under financial pressure. It cannot sensibly be treated as an equal substitute for state school education.
Second, the Government is currently advancing the Children’s Wellbeing and Schools Bill, which proposes tighter regulation of home education and would significantly curtail the autonomy that home-educating families presently enjoy. To rely on home education as a safeguard, while simultaneously moving to restrict it, undermines the strength of that argument. Third, as outlined earlier, state-funded schools are bound by statutory and regulatory constraints that prevent them from delivering the distinctively Christian ethos and Christian faith-integrated teaching offered by these schools. For parents seeking that form of education, a maintained school is not a like-for-like alternative, but a fundamentally unacceptable provision.
At a deeper level, this reasoning rests on the premise that there is no meaningful right to education other than that which the State chooses to define and provide. It elevates the State to the position of principal, if not supreme, supplier and arbiter of education. The case law underpinning this approach is deeply flawed, both domestically and at the European level.
The Strasbourg jurisprudence on which both the Divisional Court and the Court of Appeal relied has developed in a way that appears to secure freedom from religious education and not freedom for religious education. In practice, it leaves States with an almost unfettered discretion to determine how little provision they make for private and faith-based schooling. The only clear obligation is to permit private education to exist. There is no duty to support it, to treat it equally, or even to refrain from policies that make its operation more difficult, as long as it is not formally prohibited.
That logic also drains section 9 of the Education Act 1996 of meaningful force. A statutory guarantee that children are to be educated in accordance with their parents’ wishes becomes hollow if the State is free to structure the system in ways that render those wishes financially or practically unattainable. The result is a framework that entrenches government control while paying little more than lip service to the principle of educational pluralism.
The Court of Appeal’s assertion that state education is neutral, Equality Act compliant, and therefore equally suitable for all faiths and none does not withstand scrutiny. In recent years, statutory relationships and sex education requirements, together with the manner in which compliance is assessed by inspection bodies, have compelled schools, including independent Christian schools, to introduce forms of LGBT and transgender education, along with broader values-based content, that many Christian families rightly regard as incompatible with their beliefs.
Schools have been downgraded by both Ofsted and the Independent Schools Inspectorate for failing to provide what inspectors consider sufficiently robust LGBT provision. That reality makes it difficult to sustain the claim of neutrality. Education in this framework is not a value free space but one shaped by a particular moral and ideological outlook.
Moreover, some schools, whether driven by the convictions of head teachers or by a desire to satisfy perceived inspectorate expectations, go well beyond statutory requirement in promoting LGBT-affirming approaches or in delivering sex and relationships education that many parents consider age inappropriate.
The reality is far more troubling. It appears that part of the Government’s rationale in taking steps to disrupt private school education, alongside its proposed legislative changes affecting home education and independent learning centres, is to ensure that as many children as possible are brought within a system shaped by the progressive values it regards as fundamental.
Conclusion
In the end, this is about far more than tax policy. It concerns the freedom of parents to direct their children’s education in accordance with their deeply held Christian convictions, and the preservation of genuine educational pluralism in our society. While the legal challenge will continue, the issue ultimately demands moral and political courage. Not every family is able to home educate, and many low-cost Christian schools are already struggling to survive. Measures that make faith-based education financially unviable do not serve the common good but restrict it, concentrating ever greater control in the hands of the government.
Entrusting such sweeping influence over the formation of the next generation to shifting political priorities is neither wise nor safe. Those who value parental responsibility, diversity in education, and authentic Christian education should recognise that we are at a tipping point. It is time to use our voice as Christians, and demand better of our government than taxing good hard-working Christian families out of a Christian education.
Roger Kiska is legal counsel at the Christian Legal Centre in London.
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