The court of appeal has rejected the latest challenge to the addition of VAT to private school fees, telling parents they have the option to home school their children if they object to sending them to state schools.

The appeal was launched by families and leaders of four independent Christian faith schools, aiming to overturn a high court ruling last year by arguing that the decision to add 20% to fees would make small faith schools “unviable” and unaffordable, depriving children of their rights to an equivalent education.

In their judgment, Sir Geoffrey Vos, Lady Justice Falk and Lord Justice Singh dismissed the appeal, saying there was no prohibition on the UK government taxing education and no guarantee of a right to education of a particular type beyond what the state already provides. They also found that the government had justifications for not exempting types of schools from VAT.

The ruling added: “We acknowledge that the measure may have a serious impact on the [parents] if they are unable to afford private education which accords with their religious convictions but it is important to bear in mind that they have the option of home schooling if free education in the state sector is not acceptable to them.”

The appeal was made by families and leaders from Wyclif independent Christian school near Caerphilly, Emmanuel school in Derby, the Branch Christian school in Dewsbury, West Yorkshire, and the King’s school near Eastleigh in Hampshire, supported by the Christian Legal Centre.

The four schools charge much lower fees than typical independent schools, where fees can range from £16,000 to £30,000 a year. In contrast, the schools involved charge between £3,000 to £5,000 a year, and often rely on donations and volunteers as well as teachers working for lower pay than they would get in other schools.

Andrea Williams, the chief executive of the Christian Legal Centre, said the group would apply to appeal to the supreme court.

Williams said: “We will keep going in the courts but we also need politicians to recognise the deep injustice of penalising parents who simply want to bless their children with a comprehensively Christian education. Not everyone can home educate, and low‑cost Christian schools are already being forced to close under the weight of these policies.

“Through this and other measures, the government is making it increasingly difficult for parents to shape their children’s education. It is centralising control over schooling, and in doing so, exerting control over our future.”

Ane Vernon, a partner at Payne Hicks Beach law firm who specialises in education, said the ruling was “perhaps not a surprise” given Labour’s manifesto commitment to adding VAT and the difficulty of legal challenges to tax measures.

She added: “The judges’ observation that home schooling offers a viable alternative may address the human rights law argument in principle but it is likely to leave a bitter taste for many parents, for whom home schooling is neither practical nor comparable to the educational environment they have chosen for their children.”