No — the evidence so far does not show a flood of private-school closures after VAT was introduced in January 2025. And yes, state-school funding has increased, although there is an important caveat about saying that a particular pound of VAT revenue has been directly transferred to schools.
What has actually happened to private schools?
The latest government figures are surprisingly clear:
Academic year
Private schools closing
Long-term average before the change
75 a year
2024/25
60
2025/26
67
closures since the tax change have actually been below the 20-year historical average. The government also says 106 new private schools opened in England during 2024/25.
That doesn’t mean VAT hasn’t hurt individual schools. Some schools that were already financially marginal have closed, and there is legitimate disagreement about whether VAT was the final straw in particular cases. But the national numbers don’t support the claim that VAT has produced a widespread collapse of the sector.
There has, however, been a noticeable reduction in pupils. The Independent Schools Council’s comparable sample showed about 13,500 fewer pupils (-2.4%) between January 2024 and January 2025, with particularly large falls in new-entry years such as Reception, Year 3 and Year 7.
How much money has it raised?
The original Treasury/OBR estimate was:
£460m in 2024/25 → £1.505bn in 2025/26 → £1.725bn a year by 2029/30.
By November 2025 the OBR had actually revised the expected receipts slightly upwards, by about £40m a year on average, with early tax receipts supporting the original assumptions about pupil movements.
There’s also a subtle point about the “20% VAT”. Schools can reclaim VAT on many of their costs, so the Treasury estimates the effective VAT liability at about 15% of fee income, not 20%. It originally expected average fees to rise by around 10%, although individual schools have responded very differently.
Has that money actually benefited state schools?
Yes in the broad public-finance sense, but you can’t trace the VAT receipts directly to a particular school’s budget.
VAT goes into general government revenues rather than into a ring-fenced “state schools VAT fund”. The government says the revenue is being used to support public services including state education.
And state-school funding has increased substantially:
2024/25: £61.6bn
2025/26: £65.3bn
2026/27: £67.0bn
So that’s a £5.4bn increase in the core schools budget over two years. The government explicitly links the removal of private-school tax exemptions to helping finance public services and state education, but it wouldn’t be accurate to say that the entire £3.7bn or £1.7bn increases came from private-school VAT.
There is also a cost on the other side of the ledger. The Treasury estimates that eventually about 35,000 additional children will attend state schools because of the policy, costing around £270m a year. Against projected VAT receipts of roughly £1.7bn, that still leaves a substantial net contribution to the Exchequer.
So, as of October 2026, the emerging picture is quite different from some of the predictions when the policy was announced: private schools haven’t closed en masse, pupil numbers have fallen modestly, and the tax appears to be raising roughly the amount anticipated.
Sorry OP. You can’t argue with the facts!
It was a worthwhile tax that caused little damage to the sector and has raised significant revenue to fund both state education and public services. I call that a win win … don’t let facts get in the way of your righteous indignation though. !