Military families to be hit with higher private school fees despite VAT exemption

Rachel Reeves fails to fulfil pledge to shield serving personnel from 20pc tax raid

Military families face steep increases in private school fees from January, despite Labour’s pledge to shield them from a 20pc tax raid.
The Government stopped short of granting a VAT exemption for the children of military parents and diplomats on Wednesday, and instead announced it will hike a form of taxpayer-funded support.
Budget documents said the amount of funding allocated to cover the Continuity of Education Allowance (CEA) – which subsidises fees for military families – “will increase” ahead of January.
However, critics have warned this measure would not shield military families from having to pay higher fees and could still leave the Government battling a recruitment and retention crisis.
The allowance is designed to provide stability for children whose parents frequently work away, and can cover up to 90pc of boarding school fees.
Around 4,700 children from military and diplomatic families receive the support. Senior defence sources told The Telegraph the CEA is expected to be between 12 and 15pc.
A 15pc increase means military families would receive an extra £1,362 each term, equivalent to £4,086 each year, with the allowance rising from £27,240 to £31,236.
If a child in receipt of CEA currently attends a boarding school which charges £30,000 a year, the family pays £3,000 in fees while the allowance covers the remaining £27,000. If that school raises its fees by 20pc as a result of the tax raid, fees will go up to £36,000 a year. 
Assuming a 15pc uplift in CEA, military families would be able to claim the new maximum allowance of £31,236 but they would be left having to foot the difference of £4,764, meaning their fees would increase by 56pc.
A spokesman for the Army Families Federation said: “While it is helpful to finally be informed that CEA will be increased, they need to know by how much and when they will receive it, as they plan for how they will meet next term’s school fees.
“And as the 10pc parental contribution will still be affected by VAT increases, there may be families who will find this unaffordable.”
Labour’s analysis estimates school fees will only rise by an average of 10pc. Under this assumption, a military family would be £300 worse off as the school’s fees would rise to £33,000 a year and families must pay at least 10pc of the fees themselves.
One army official said: “I, and many others, do not have the answers we need to secure our continued service to HM Armed Forces. If this VAT addition adversely impacts my family, I will be forced to seek alternative employment, more than likely overseas.
“By the age of seven our child had already attended five separate educational establishments due to my military service, I will not make her move again.
“Despite these promises of an increase in CEA, this policy remains likely to adversely impact those families who have dedicated themselves to the service of this country.”
Others have praised the uplift to the CEA as a necessary step to prevent a military exodus, but called on the Government to urgently issue further details.
Lord Kempsell, a Tory peer who campaigned for an exemption for military families, said: “I welcome this decision from the Government to make our heroic military and diplomatic families effectively exempt from VAT on school fees.
“There are still technical questions about how this will be implemented and the details and timing of the CEA recalculation, and we need clarity on this from the Government immediately.”
The underwhelming support for military families comes as specialist private schools have also complained of paltry support offered by the Chancellor.
Rachel Reeves’s maiden Budget offered a faint “silver lining” to independents who predominantly educate children with special educational needs.
Around 50 specialist private schools will be able to claim 80pc tax relief on business rates but will still be liable to pay VAT.
Michell Catterson, headmistress of specialist independent school Moon Hall School in Reigate, said that Labour was still “punishing” families with special educational needs (Send) children.
She said: “It’s great and it’s a little bit of a silver lining and hopefully it will help me support parents who are struggling to pay the fees.
“But the fact they have made an exception for schools such as mine highlights that schools like us should be treated differently. If they acknowledge that, why are they punishing these vulnerable families who have no other option.”
Just 7,600 pupils at private schools receiving Send support currently have EHC plans, while 103,000 do not, according to the Independent Schools Council (ISC), an industry body for private schools.
A spokesman for the ISC said: “While we welcome the recognition of the vital work independent special schools do with and for children with Send, we are disappointed that the same consideration has not been extended to the thousands of families who have chosen an independent school for the specialist support it can offer their children.
“The majority of children receiving Send support in an independent school do not have an EHC plan. Because of the rush to implement this policy before proper impact assessments, over 100,000 children with SEND now face VAT on their fees.”
The Treasury and the MoD were approached for comment.