Labour urged to end ‘shocking’ armed forces tax after school VAT raid | UK | News

Politicians are calling on the Labour government to end their controversial tax raid on the armed forces, after it emerged that British military personnel were being made to pay more to send their children to the same schools as their American counterparts. This unfairness has sparked outrage, with critics accusing Labour of treating service personnel as “second-class citizens.”

The Labour Party’s tax change for private schools removed their VAT-exempt status, leading to a huge 20 per cent increase in fees from the first day of this year. For many military families, who often rely on private education due to frequent relocations, this hike can add extra financial strain during an ongoing cost of living crisis.

However, US military personnel serving in the UK do not have to pay a penny more due to a long-standing VAT relief agreement between the two allies.

Shadow Defence Secretary James Cartlidge has called the disparity “shocking” and called on Labour to change the policy, after it had previously claimed there were now no exemptions to VAT on private education. The Conservative MP said: “I do not begrudge them that, US forces are based in our country to defend us. But I want the same treatment for our people.”

The Ministry of Defence’s Continuity of Education Allowance (CEA) will partially cover this increase in education costs with up to 90 per cent of fees covered by the support fund. Currently, around 4,700 children of armed forces personnel and diplomats attend private education using CEA support, which was increased by 12.5 per cent in light of the higher VAT and fees faced from January 1.

However, despite this increase in support for personnel using the CEA scheme, the Telegraph’s analysis of the Labour VAT policy’s impact shows prices rising more, with families experiencing a 14 per cent jump in school fees. This is leading to UK troops being more out of pocket than their erstwhile allies, who continue to experience a tax holiday.

HMRC was forced to explain to schools why only American children get subsidised private education in Britain. They said in a note: “Entitled US Forces individuals are allowed to purchase goods and services VAT free under the VAT free purchase scheme; private school fees fall into the category of ‘services’ for these purposes.”

Pressure is now mounting on Labour to address the disparity between UK and US forces. James Cartlidge MP previously said: “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.

“We consistently argued for an exemption to be applied. Labour must now urgently adopt that policy or accept they are delivering a deep unfairness to those who serve our country.

“Given the growing threats Britain faces, this pernicious policy is hitting our armed forces at the worst possible time.”

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