The Short-Run Impact of the 2025 VAT on Private School Fees on State School Enrollment and Funding: Evidence from Barnet and Harrow

Henry Zhu

doi:10.36948/ijfmr.2026.v08i04.86069

The Short-Run Impact of the 2025 VAT on Private School Fees on State School Enrollment and Funding: Evidence from Barnet and Harrow

Author(s)	Henry Zhu
Country	United Kingdom
Abstract	The implementation of a Value Added Tax (VAT) at 20% on private school fees in the UK in 2025 will be a significant policy change, making private schooling relatively more expensive than state schooling; as such, it may cause some families to switch from private schools to state schools, with consequent effects on total enrollment and funding levels. This paper investigates whether the introduction of VAT has affected state school enrollment and funding at local state secondary schools close to private schools, specifically in those areas where substitution would occur, i.e., areas with high private school densities. This paper uses administrative data from the UK Department for Education to compare pre-VAT and post-VAT school enrollment, total funding, and funding per pupil in 2024–25 and 2025–26, respectively. The difference-in-differences empirical method in this study compared neighboring local government areas-Barnet, with high private school density, and Harrow, with low private school density-so that more significant changes would occur in areas with high densities of private schools after introducing VAT. The analysis shows no immediate increase in average state school enrollment following VAT; indeed, average state school enrollments decreased in Barnet and Harrow in the year following VAT's introduction. There is a localized substitution effect in some areas because of greater variation in Barnet's enrollment and funding; however, the overall total short-term impact is minor and unevenly distributed. Keywords: Private School VAT, State School Enrollment, School Funding, Private Education, State Education, Substitution Effect, Cross-Price Elasticity of Demand, National Funding Formula, Difference-in-Differences, Barnet and Harrow
Field	Sociology > Economics
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-08-23
DOI	https://doi.org/10.36948/ijfmr.2026.v08i04.86069

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The Short-Run Impact of the 2025 VAT on Private School Fees on State School Enrollment and Funding: Evidence from Barnet and Harrow

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