Military families will face higher private school fees despite VAT exemption

The allowance is designed to provide stability for children whose parents frequently work away and can cover up to 90 percent of boarding school fees.

Approximately 4,700 children from military and diplomatic families benefit from the support. Senior defense sources told The Telegraph the CEA was expected to be between 12 and 15 per cent.

A 15 per cent increase means military families will receive an extra £1,362 per term; This works out to £4,086 each year and the allowance will rise from £27,240 to £31,236.

If a child receiving CEA currently attends a boarding school charging £30,000 a year, the family pays £3,000 in fees and the allowance covers the remaining £27,000. If that school increased wages by 20 percent Fees will rise by up to £36,000 a year as a result of the tax raid.

Assuming a 15 per cent increase in CEA, military families will be able to claim the new maximum allowance of £31,236 but will have to pay the difference of £4,764, meaning their pay will increase by 56 per cent.

A spokesman for the Federation of Military Families said: “Whilst it is useful to be informed that the CEA will eventually be increased, as they plan how they will cover next term’s school fees they need to know how much they will receive and when.

“And as the 10 per cent parental contribution will still be affected by VAT increases, there may be families who find this unaffordable.”

Labour’s analysis predicts tuition fees will only increase by an average of 10 per cent. Under this assumption, a military family would be £300 worse off, school fees would rise to £33,000 a year and families would have to pay at least 10 per cent of the fees themselves.