MSPs are being urged to examine the impact of VAT on private school fees, with Scottish Conservative MSP Meghan Gallacher calling for Holyrood’s new education committee to look at the effect on both state and independent schools.
The issue comes after the UK Government introduced 20% VAT on private school fees in January last year, a move that increased costs for parents. Labour said the money raised would help stretched state schools, but critics now say the policy is putting pressure on both sectors.
Call for Holyrood inquiry
Gallacher, the Scottish Conservative education spokeswoman, wants the committee to assess how the policy is affecting schools across Scotland.
She said: “Scotland’s schools were already under huge pressure thanks to years of SNP-Green mismanagement, and Labour’s VAT raid is now piling on even more.
“Private schools are under mounting financial pressure, while state schools are being left to pick up the pieces as more pupils transfer across.
“Labour promised £150 million to help meet that pressure, but families and schools are still waiting to see it.
“The Education Committee should now properly examine the growing pressure on private and state schools and the impact these policies are having across Scotland.”
Schools facing financial pressure
In January 2025, the UK Government removed the VAT exemption for private schools, meaning they are now subject to the standard 20% VAT.
In Scotland, the move came on top of an earlier decision to strip most mainstream independent schools of charitable rates relief from April 2022, meaning they are now paying full business rates on often large campuses.
Last month, one head teacher warned that Scotland’s private schools could be forced to sell land and other assets to cover millions in lost income. Anthony Simpson, principal of the newly merged Erskine Stewart Melville School (ESMS), said the institutions he oversees had been forced to adapt since VAT was introduced on pupil fees.
He said: “I won’t name names, but you will soon see which schools are selling off property and rationalising on to one site because their numbers have dropped or because they need the funds to be able to plug a short-term gap,” he told The Scotsman.
“If we hadn’t taken significant action, then we’d have been worried about the future of the school, and I think that’s true for all schools in Scotland and beyond. I’ve worked in lots of other schools in the UK, and they’re all having the same conversations.”
Examples in Glasgow and Edinburgh
Earlier this year Hutchesons’ Grammar School in the southside of Glasgow put its primary school building in Kingarth Street and later its tennis courts in Darnley Gardens up for sale, with both primary and secondary pupils to be located at the school’s Beaton Road campus.
Three adjoining Victorian villas in the affluent Ravelston area of Edinburgh, formerly used as boarding houses, have also been sold to help fund the building work needed to complete the merger of Edinburgh’s Mary Erskine and Stewart Melville schools.
Meanwhile, private schools in the Republic of Ireland are actively promoting no VAT and lower fees in an effort to attract UK families, including those from Scotland. The King’s Hospital School in Dublin says on its website: “Looking for an Irish boarding school with UK-level excellence and no VAT?
“The King’s Hospital School is a co-educational community combining strong academics, sport, and pastoral care, only 25 minutes from Dublin Airport. Founded in 1669, we are one of Ireland’s oldest and most respected boarding schools … Over 350 years of tradition. Excellent Leaving Cert results and college progression.
“Modern boarding houses with live-in staff. Sport, arts, music, and enrichment programmes …. Affordable fees for UK families.”
Alexandra College, another independent school in Dublin, has reported increased interest from UK families since VAT was introduced on school fees.
Wider concerns over the sector
Several private schools have shut in Scotland in the past two years citing financial pressures. Those include Fernhill School in Rutherglen, and Drumduan School near Forres, which was co-founded by the Oscar-winning actress Tilda Swinton.
A report published by the Scottish Council of Independent Schools (SCIS) in April claimed that imposing VAT on private schools had cost the Scottish economy £60 million and 900 jobs.
The research, produced by consultancy Biggar Economics, found that pupil numbers in Scotland’s independent schools have fallen 9% since the tax was introduced, including a 13% decline in pupils joining at the start of primary school and a 15% drop in those joining at the start of secondary education.
A spokesman for the Scottish Parliament’s said: “The Education and Gaelic Committee will consider its work programme next week.”
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