BYL & Anor, R (on the application of) v Chancellor of the Exchequer

In challenges under article 14 to a neutral tax measure, the court must objectively and reasonably justify the absence of an exemption for persons in significantly different situations. The correct inquiry is the four-stage proportionality test. References to a margin of discretion assist that inquiry but do not replace it. Practical concerns, including cliff-edge unfairness, tax avoidance, administrative burdens and lost revenue, may justify refusing a low-fee exemption, even where the impact on religious communities is serious. Article 2 of Protocol 1 secures effective access to existing education, not education of a particular kind or state subsidy of private schooling. An increased tax that does not make private education impossible or practically impossible does not impair the essence of that right. Future income is not a possession under Article 1 of Protocol 1 where no enforceable claim exists.

Two groups of claimants appealed against the dismissal of judicial review claims concerning VAT on private school fees. Group One comprised members of the Charedi Jewish community. Group Two comprised Evangelical Christian schools, parents and children. The Divisional Court granted permission to apply for judicial review but dismissed the claims: [2025] EWHC 1467 (Admin), reported at [2026] 1 WLR 10.

The appeals challenged the measure under article 14 read with article 2 of Protocol 1, and, for Group Two, under article 1 of Protocol 1 and article 2 of Protocol 1. The central issues were whether the absence of a low-fee exemption was justified, whether the tax interfered with protected property or education rights, and whether it was discriminatory.

Both appeals were dismissed. Applications to adduce fresh evidence were granted, but the additional evidence did not materially alter the issues.

1. Appellate proportionality. Applying the guidance in Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2025] UKSC 30, this was a paradigm case for a fresh appellate proportionality assessment. The Court made its own assessment while giving appropriate respect and weight to Parliament’s and the Executive’s choices in social and economic policy.
2. Article 14. In the context of both Thlimmenos and indirect discrimination, the issue was whether the absence of a low-fee exemption was objectively and reasonably justified. The four-stage test in Bank Mellat v HM Treasury (No 2) [2013] UKSC 38 applied. The Government’s evidence identified compelling practical reasons for rejecting an exemption, including unfair threshold effects, market distortion, avoidance risks, administrative burdens, reduced revenue and inconsistency with wider education policy. Those reasons established a rational connection, the absence of an effective less intrusive alternative and a fair balance.
3. Article 2 of Protocol 1. The first sentence secures effective access to educational institutions existing at the relevant time. It does not require education of a particular kind or quality, state subsidy of private education, or the continued operation of a particular institution. Private schools may be established and accessed where they exist, but making them more expensive does not impair the essence of the right unless operation becomes impossible or practically impossible. State education respected the relevant convictions, and home schooling remained available.
4. Article 1 of Protocol 1. The schools’ complaint concerned anticipated future income, not goodwill or an enforceable claim. The tax was enacted in the public interest and, even if property rights were engaged, was proportionate. The VAT Directive did not make taxation of private school fees contrary to the public interest.
5. The international instruments relied upon did not expand article 2 of Protocol 1. Private and state-funded schools were not in relevantly similar positions for article 14 purposes. Any discrimination was justified. The appeals were therefore dismissed.

• Court of Appeal (Civil Division) dismissed both appeals.
• Divisional Court granted permission to apply for judicial review but dismissed the claims: [2025] EWHC 1467 (Admin), reported at [2026] 1 WLR 10.