If VAT is added on Private School Fees, then it will be added onto University fees as well

“Pumpkinpie1 · Today 14:56

Day centres that aren’t charities are already having to pay 20% vat . Making massive impact on the disabled & yet wealthy folk are whining because they will have to pay more for a private school
So blooming selfish”

Can you please post a link backing this up and specifying what you mean exactly so the rest of us can understand?

Do you mean for profit run day centres where councils have to pick up the tab (the type that foreign companies have muscled in because they are so profitable)? Or something completely different.

Why do people keep accusing others of being Tories for asking complex tax questions on this proposed policy? Parents of SEN children in SEN schools and private schools, forces families, parents of children with DFE funding in specialist music and ballet schools genuinely do not know what will happen to them and their children. Let alone teachers and staff in private schools. All many of us are saying is that if you propose to add this VAT in the first budget many people need time to prepare and you have to be absolutely clear on the implications.
And no I am not going to be fobbed off. Not after Brexit when we were first told a) the population would not vote for it and b) there isn’t going to be a hard Brexit it will be SM/CU etc and we got the opposite. We absolutely need to understand the implications on the entire Education sector. That affects everyone with any stake in it.

Universities do have charitable status though

Day centres that aren’t charities are already having to pay 20% vat . Making massive impact on the disabled & yet wealthy folk are whining because they will have to pay more for a private school
So blooming selfish

This is not how VAT works.

Private schools do not charge VAT because at the moment education is an exempt service. It is not because the private school has charitable status.

@meditrina Thanks for the info!

Not on the pattern being proposed here, which is the imposition of sales tax on fees for the delivery of education by schools - which will apply whether the school is set up as a business or a charity (and not be relevant to state sector where no fees are charged)

I wonder if it could happen to the university of Buckingham? That’s some sort of private isn’t it?

That was meant to say Chetham School
of Music.

@Fleeceflop - my apologies, I wasn’t very clear. I meant the Royal Ballet School, Purcell’s, Chatham- specialist schools of that ilk where some parents pay the full fees but many do not or have free places.

I can see wording to cover secondary education in some way, and then specialist sen schools having to apply for some form of accreditation that would exempt them from the changes. This would mean that those parents who send sen kids to mainstream private schools would still pay the VAT. Ballet lessons etc are not my specialty. But when it comes to private piano lessons etc a tutor would have to have a turnover over £85k (the normal vat registration threshold) before they’d have to register and start charging VAT.

Small businesses are VAT exempt anyway aren't they so it wouldn't effect private music teachers. I would have thought it would be pretty easy to exclude specialist schools too from paying VAT although @Fleeceflop would know more.

People link them because they are, at present, covered by the same exemption ie no taxation on education.

When this principle is withdrawn in Britain, then it could mean taxation on universities and preschools as well (and it does seem illogical to tax only the compulsory education years).

So yes, we do need to watch out for the administrative competence in drawing up the new definitions and rules (and I have a pretty low opinion of current standards), but I don't think anyone has an intention to tax education deliberately, other than Labour at private schools.

You seem to be responding to a completely different comment.

That definitely won't be a Labour policy. It's not the same thing at all

The only way to make a viable comparison between uni fees and private school fees is to create a system in which some universities charge fees and others are available to all, entirely free of charge, mirroring the 4-18 education system.

Hope that helps, OP.

@Fleeceflop - is it a simple change of wording in a VAT Notice to capture private schools only or will it require new legislation? Can specialist music and ballet schools be easily excluded? Is it easy to exclude SEN schools? (Thinking especially of those with part local authority and part private funding)

It’s incredibly dangerous for private schools to try loopholes though. So say a school tries a loophole, it is deemed later that it doesn’t work, HMRC bill the school for every penny of VAT you were supposed to have billed parents over the past 4 years and it is up to the school to pay the HMRC bill upfront and try to recoup that from parents. I can’t see many schools willing to take that monumental risk.

Chartered tax advisor specialising in VAT and education here.

the government can absolutely decide to put VAT on tuition fees. They can equally easily decide to not to. If you think it’s tricky to distinguish between a school education and a uni education you haven’t met the VAT legislation. Putting VAT on private schooling DOES NOT mean that VAT will also automatically be added to uni fees.

We then come to the question of whether a government would choose to add VAT to uni fees. Having a university educated population is widely seen to be a good thing for society. An educated workforce is an economically productive workforce. Choosing to add VAT to those who chose to go to university is a different decision to choosing to add VAT to those who opt for a private education over a state education. If people are put off private school by having to pay VAT they’ll still get a school education at a state school. If people are put off uni by having to pay VAT then you’ll have a populace which is not university educated.

VAT could be added to uni fees is the government is desperate to raise revenue, but I can see it coming after the likes of ditching the pensions triple lock, adding capital gains tax to house prices, rolling NIC into income tax and other drastic policies.

contrary to what has been said above most universities are charities.

“I'm sure private schools will be looking and finding some loopholes. It doesn't mean it isn't worth charging VAT in the first place though. If anything the fact that it won't mean a sudden huge increase in fees means it might be more workable.”

It is not just a question of morality or workability though it is also a simple question of Maths. If administering it becomes more expensive than the cash it generates it is not worth it, regardless of ethics/legal workability. And it will be pretty sad if eg a lot of charitable music schools go bust during the process. You may not care about private music teachers delivering lessons in private schools but when fees go up, notice is promptly given to people like that. Who cannot afford to lose their income and are usually very qualified and underpaid already.
So all interest groups need to be consulted properly and wide reaching consequences considered. For example, how would state schools bring music teachers back in? How are they going to capture MML teachers leaving private schools quickly due to private schools having to cut down on offering 8 language choices to save cash. Planning has to go into this.

I'm sure private schools will be looking and finding some loopholes. It doesn't mean it isn't worth charging VAT in the first place though. If anything the fact that it won't mean a sudden huge increase in fees means it might be more workable.

Quite. I don't know why some posters think it would be impossible to tax private schools but not universities, especially given the latter receives government funding anyway.

I think this is the crux of the issue. I'm not sure it is simple to write a new rule which
(a) Includes all institutions intended
(b) Does not include any institution not intended
(c) Is not in conflict with other tax rules and open to legal challenge

It is an interesting intellectual exercise to try to come up with such a rule:
(1) VAT on all institutions teaching children between 5 and 18 - suddenly my daughters football club fees are subject to VAT.
(2) VAT on all institutions teaching towards GCSEs and A-levels - suddenly the local private IB school becomes very popular.
(3) VAT on all institutions providing pre-undergraduate qualifications. Suddenly a university foundation year is VAT added, and some schools will come up with their own qualifications which are not under any obvious umbrella.
(4) VAT on a specific list of institutions - suddenly "crammer colleges" and "full-time tutors" get very popular, whilst there are huge numbers of legal challenges as insitutions which see themselves as being on the wrong side of the boundary complain that the rule is arbitrary and unfair.

I can imagine if sports, music and creative arts clubs are exempt, then suddenly private schools will be separating out their hours so that 50% of their fees are for "academic support" with VAT on and then "school proper" finishing at lunch followed by "after school clubs, societies and pastoral care" all afternoon which is VAT free. (Some schools already do something similar so that parents can use their "tax-free" childcare vouchers on these activities).

What sounds like a simple rule might well be really quite challenging. When there is a financial incentive, you can be sure that there will be people looking for and exploiting loopholes.

“It’s simply not going to happen, so you’re going to have to live with the terror of VAT on university fees.”

Next someone is going to say stop worrying about all this nonsense of VAT on Education, they are never going to do it anyway. They just want normal people to vote for them. As not even our MPs can differentiate between the difference between VAT, charitable status and where it overlaps, clearly Joe Blogs won’t understand any of it.