The Labour government’s decision to exempt the children of US military personnel from its controversial VAT hike on private school fees has sparked outrage among British service families, who are left to bear the full cost of the tax. Critics have accused Labour of treating UK armed forces like “second-class citizens” and ignoring warnings of the impact on military families.  

 

Under the policy, which introduced a 20 percent VAT levy on private school fees from January 1, the children of American service members stationed in the UK benefit from a historic tax relief agreement between the two countries. HM Revenue and Customs (HMRC) confirmed the exemption in a briefing note, stating that private school fees fall under the “VAT-free purchase scheme” for US military families.  

 

 

This exemption has drawn sharp criticism, particularly as Labour rejected calls to grant the same relief to British military families. Shadow Defence Secretary James Cartlidge expressed dismay, stating, “The Government is treating British forces as second-class citizens. Whilst US military families are exempt from VAT, ours are having to fund Labour’s ideological education tax. Labour must urgently adopt an exemption or accept they are delivering a deep unfairness to those who serve our country.”  

 

Concerns are mounting that the decision could drive British military families away at a time when the Army is at its smallest size in 200 years. Despite this, Chancellor Rachel Reeves has resisted calls to adjust the policy, instead opting to increase the Continuity of Education Allowance (CEA), a taxpayer-funded subsidy for service personnel and diplomats.  

 

The CEA provides stability for children whose parents are frequently posted away from home, covering up to 90 percent of boarding school fees. Following the VAT hike, the government raised the maximum CEA subsidy to £30,633 a year for secondary boarding school pupils, up from £27,240, and to £26,190 for primary school pupils, up from £22,467.  

 

However, these increases have done little to alleviate the financial burden on military families, particularly as private school fees have risen by an average of 14 percent since the VAT levy came into effect. The average cost of secondary boarding school fees has now reached £48,403, leaving families paying around £2,500 more even after the CEA uplift.  

 

The Army Families Federation has voiced disappointment at the government’s handling of the issue. “We are disappointed that a similar exemption has not been made for the children of UK service personnel in their own country,” the organization told *The Telegraph*. “The mid-year uplift in CEA provided some limited immediate relief, but it does not cover the full increase in costs that many Army families are facing – not least since CEA recipients must still pay a minimum of 10 percent of the total fees.”  

 

Adding to the frustration, families report a lack of clarity on future plans for the CEA. Despite government assurances that the impact of the VAT hike on service families is being monitored, requests for further details on how this is being assessed or what actions might follow have gone unanswered.  

With British service families left to shoulder the financial strain, the policy has fueled a broader debate about fairness and support for the armed forces. As tensions rise, the government faces growing pressure to address what critics describe as a glaring inequity in its approach to supporting those who serve the nation.

 

Based on a report by Daily Telegraph 2025-01-27

 

 

Another group alienated by Rachel from accounts and her budget for recession. 

6 hours ago, Social Media said:

glaring inequity in its approach to supporting those who serve the nation.

 

Well, there are others cueing: eg doctors in hospitals. They serve the nation and helps people to fight illness and prevent from becoming ill.

UK Armed Forces have always been treated unfairly they don’t have anyone to fight for them be it pensions , pay rises, accommodation, working  hours I retired in 1991 the working conditions of a soldier were disgraceful compered to that of the other services police , fire , prison they all had unions who represented them we did even have Health and Safety it was a case of suck it up ! In the mid 80s I was posted to the USA where I served with US Forces and boy how they were looked after was nothing short of amazing compered to UK Forces .

8 hours ago, Social Media said:

HM Revenue and Customs (HMRC) confirmed the exemption in a briefing note, stating that private school fees fall under the “VAT-free purchase scheme” for US military families.

So it seems there's an existing agreement in place that made this decision inevitable.

 

https://www.gov.uk/guidance/vat-relief-for-suppliers-to-visiting-forces-notice-431

 

According to the info on the link this agreement was put in place by the last Conservative Government in 2016, and updated by the last Conservative Government in 2020.

 

That said, I am not in favour of what Rachel did.  One example of several I could share is a friend I have in Streatham, south London.  Their local government school is close to the bottom of most league tables and is riven with gang and drug-fuelled crime.  The family has struggled to send their 2 kids to a better school; they can no longer afford to do so after this tax imposition.

Nice to see the private schools jumping on the profiteering bandwagon by increasing their fees by 14% before any tax is applied.

The chart also displays how these schools have been increasing their fees every year, and almost all way higher than inflation. And no-one complained about that.

 

13 hours ago, mrfill said:

The chart also displays how these schools have been increasing their fees every year, and almost all way higher than inflation. And no-one complained about that.

They did, just not on AN.  Or the wider news media didn't want to print stuff about rich folks moaning about rising costs.

must be a bit braindead to want to go fight and die for some rich politicians or companies or other brain rot propaganda