The Chancellor has upheld Labour’s manifesto pledge not to increase the headline rate of VAT. However, the introduction of 20% VAT on private school fees and boarding from 1 January 2025 has been confirmed, as has the removal of business rates charitable relief for private schools in England (from 1 April 2025). These policies are expected to raise up to £1.8 billion per year by 2029-30, and given the spending plans announced for state schools, including the hire of 3,000 additional teachers, additional monies raised will be welcomed by the government.
Whether this £1.8 billion will be achieved is yet to be seen, considering the pupils expected to leave or not enter the private system, along with the potentially vast amounts of VAT that private schools will be able to recover on past, present and future capital expenditure. Add to this the High Court legal challenge currently being brought arguing the policy breaches human rights law, things are perhaps not as certain as the government would like.
Air Passenger Duty rates have fallen behind inflation and so in 2026-27 will increase by £2 for economy class short-haul flights, £12 for economy long-haul and relatively more for business class. Higher rates for all passengers travelling on larger private jets will increase by 50% and the government is consulting on extending the higher rate to all private jets.
In a boost for the small brewing industry duty on draft beer will be cut by 1.7%.
A flat rate duty of £2.20/10ml will be introduced on vaping products from 1 October 2026 and duty on tobacco products will also increase.
So, whilst there is likely to be no escape from VAT on private school fees, if you do want to escape with the family you might decide to put your kids on an economy flight whilst you take the private jet in peace and quiet. And to console yourself in the airport lounge, stick to draft beer and don’t vape!