A group of families with children at private schools who challenged the government in court over the VAT policy on private school fees lost the case today.

Three judges at the High Court have dismissed the challenge ruling that the policy did not sufficiently infringe pupils’ human rights, specifically special needs pupils, and pupils at faith and international schools.

In the judgement published by Mr Justice Chamberlain, Dame Victoria Sharp and Lord Justice Newey, the court concluded that even though the legislation does interfere with some of the appellants’ human rights, there was a “broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise”.

The judgement went on: “We have concluded that the challenged legislation falls within that broad margin.”

Julie Robinson, the chief executive of the Independent Schools Council, said: “This is an unprecedented tax on education and it was right that its compatibility with human rights law was tested.

“The ISC is carefully considering the court’s judgement and next steps. Our focus remains on supporting schools, families and children.

“We will continue to work to ensure the government is held to account over the negative impact this tax on education is having across independent and state schools.”

Sophie Kemp, the head of public law at Kingsley Napley, which represented the parents, said: “This is a disappointing decision for the claimants, who are carefully considering the court’s judgement. It was important to challenge VAT on school fees, which both the government and the court recognised had a discriminatory impact on children at religious schools as well as significant impact on children with SEN.

“The court felt that it was not able to interfere because of the leeway it must give to Parliament. Unfortunately, this doesn’t help the claimants, who must now weigh their options.”

Robert Lewis, partner and head of the education group at law firm Mishcon de Reya, commented: “The High Court judgment – a result many anticipated – will be a disappointment to independent schools and the families who entrust them with their children’s education. From the outset, the claim faced formidable legal obstacles: it sought to overturn a fully democratically endorsed policy; one introduced in the Labour manifesto, debated in Parliament, and enacted into law.

“Nonetheless, the judgment does offer a modest but meaningful silver lining for independent schools. It observes that an outright ban on independent schools would likely breach the United Kingdom’s obligations under the European Convention on Human Rights.”