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

Yes we can. So are universities. No they don’t.

It would be entirely reasonable one the logic going on these sorts of threads to require the students, who are going to benefit from their degrees by a significant margin. to pay more.

Once they remove the sacred status of education and apply VAT, we will all see just how fast the arguments for protecting other aspects of education from the governments grasping fingers will fall.

Labour has specifically said that the money will not be ring fenced .

This is partly because we do not have a hypothecated tax tradition in this country and partly because it allows them ( and every other government) to fudge tax revenues. So far in their plans they have spent the paltry amount of revenue that this will raise ( less than 1% of the education budget on their own figures ) about 3 times over .

As if VAT would ever be ring-fenced

but why would it not be ring fenced? The VAT on private schools will be.

it could also be a way to enable the government to direct the money specific universities / courses. If fees just were to rise that would not be possible.

Then they may as well simply allow unis to increase the UG fees. As if VAT would ever be ring-fenced!

Well, I assume the VAT from the private schools go to the Gov as well? But they have said the proceeds would all go to state school?

Then they can do the same for universities. People who can afford university will pay a bit more and the universities will get money from the government.

Universities are underfunded anyway and I think that they will need the money tbh.

You do know that VAT goes direct to the Gov yes? Universities would never see it. In fact they wouldn't even collect it - the Gov would give it to the SLC, then take it back again - so a pointless exercise.

To be honest, I think that once we have VAT on private schools, we should introduce that at Universities as well. It is only just above 38% of the population who goes to university and it can be argued that this is choice to do so - not everyone is able to make that choice.

Universities are underfunded anyway and I think that they will need the money tbh.

Schools that serve the wealthiest like Eton or Marlborough won’t be impacted by this at all. It is definitely going to be the smaller schools with mostly day pupils that generally serve the middle class and a lot of SEND children will be pummelled.

Schools that serve the squeezed middle are likely to have 80% or more of their costs being staff. They can’t reclaim input tax on that.

Food won’t be recoverable, as it doesn’t tend to be “luxury” ingredients.

Then we need to think about international competitiveness, lots of international students could go elsewhere. You would be surprised at how many international diplomats and politicians have their kids educated in the UK. This is soft power we could loose if we get too expensive.

If they go ahead with this VAT on education but limited to private schools does that mean we cannot join the EEA like eg Norway? But we could still have bilateral treaties in theory like Switzerland with the EU but we know the EU won’t allow another Switzerland?

Because at present, the EU stance on "no tax on education" applies to fees for schools, nurseries and universities. Once you remove that principle, then it becomes possible to tax all of them, but the current proposal seems to be for it to be only on the years attended by pupils of CSA plus Sixth Forms.

Always remember as well that despite its name, VAT is a general sales tax. It's not a luxury tax.

I don't think there is any political will to tax fees other than school fees, but precise definitions and T&Cs of new arrangements have not yet been published

you cant compare this to Vat on university, private schools are a perk for the wealthy yet university needs to be available to all.

Tory Shitstirring

Correct. Private schools currently pay VAT on purchases, and they cannot reclaim it (unlike state schools). This is because education is VAT exempt rather than zero-rated.

If they become VAT registered, they will be able to reclaim the VAT. I don’t think the implications of this have been properly understood. The irony is that the wealthier schools have a higher proportion of capital expenditure so will be able to claim more back than the smaller, cheaper schools.

The VAT policy is simply not worth it if they are backtracking on everything else to appear centrist anyway. Because if they have a policy like this that doesn’t stack up to the rational lawyer accountant type brain, then they can’t sell the impression that they are the rational party of the centre aka let the grown ups take charge to sort the Tory mess (bye bye Buffoon Boris and clutching at straws Rishi, make way for lawyer Starmer and rational Reeves). And that is exactly what they are selling, they also cannot be seen to be harming any children post Covid or any teachers really. And there are a fair amount of those in the private sector especially with milder SEN. The stats are there.

No it doesn’t . VAT is a tax on the supply not the supplier . Firstly independent schools currently pay VAT on anything Vatable that they purchase, unlike state schools they cannot reclaim this . So they are not exempt from paying VAT and in fact pay quite a lot of VAT .

You’ll have a better understanding of this as I’m not an accountant but in addition to what you say, my understanding is that if the schools start having to charge VAT on their supplies, they’ll be able to reclaim VAT they’ve paid on, for example, their building projects (which they currently can’t do) - and they’ll be able to make those claims retrospectively (up to 10 years I think?)

So the Treasury will end up paying money to the schools. Which could be a large amount.

Exactly this. The number of people who are in favour of this policy, and who will vote as such, and yet don’t understand even the basics is worrying.

To be fair on the public though, the media and Labour Party have been suggesting for years that stripping them of charitable status would mean VAT is chargeable. Even they don’t understand it.

Everyone is entitled to their own opinion on this, obviously, but if you are going to have an opinion, at least make sure you’ve understood the basics. People are still posting factual inaccuracies on these threads, despite having the facts pointed out to them numerous times. They seem blind to the reality and, for some reason, unwilling to learn about it.

I find it alarming how many people haven’t understood that charitable status and VAT on fees are unconnected. (And also that Labour u-turned on the charitable status).

It’s a bit concerning that people will vote on the basis of supporting this policy without the faintest understanding of it or its possible implications.

My kids are state educated but we pay for loads of educational stuff privately, as I’m sure lots of families do. Some tutoring, drama, football, swimming. All those things are unfair advantages, just like private school - anything private and educational is an unfair advantage for the privileged. And I can’t afford an extra 20% on top.

Private schools don't have to pass the cost on. They could absorb the increase. They could make savings, find efficiencies, sell assets, like every public sector organisation has had to do over the past 14 years.

As @cyclamenqueen has pointed out, you are incorrect. From the government website

“Any business (and this may include a charity or its trading subsidiary) that makes taxable sales in excess of a set figure, known as the VAT registration threshold must register for VAT.
Taxable sales are business transactions that are liable to VAT at the standard, reduced or zero rate. Guidance on whether something is a business transaction can be found in section 4. Many charities make taxable sales and if your level of income from those sales exceeds the VAT registration threshold you will need to register for VAT. This is not optional and there are penalties if you fail to register on time.

If a charity’s income from taxable sales is below the VAT registration threshold you can register for VATvoluntarily. But if a charity’s income from taxable sales is below the threshold, and you do not want to register for VAT, the charity does not need to charge VAT on any of its income. The charity should check regularly that it is not exceeding the VAT registration threshold.
But a charity that makes no taxable sales, either because the charity has no business activities or because their sales or income are exempt from VAT, cannot register for VAT.”

This is why the policy is a ridiculous one. A large number of the people who are in favour of it don’t even understand how VAT works, and the charity position.

And, for clarification, even the Labour Party have dropped plans to strip schools of charitable status.

Chartered accountant working in school finance here

No it doesn’t . VAT is a tax on the supply not the supplier . Firstly independent schools currently pay VAT on anything Vatable that they purchase, unlike state schools they cannot reclaim this . So they are not exempt from paying VAT and in fact pay quite a lot of VAT .

Secondly, they do not charge VAT on their fees because education is an ‘exempt supply’. That means that anybody charity or not ( and only about 60% of independent schools are charities anyway) who supplies education will not charge VAT on that supply. The proposal by Labour is to make education a ‘chargeable supply’ ( we do not know yet if it will be standard rated) , if this happens then the schools will both charge VAT to the parents on the supply and reclaim any VAT suffered on purchases attributable to that supply .

Actually it does as charitable status means vat excempt

Only around half of schools have charitable status, and that has nothing to do with the VAT position.

Except for the special schools dealing with severely disabled children etc... yeah perks for the privileged them...

Private schools have charitable status which is totally wrong and should be reviewed! Really hope they do charge VAT on the fees !

@Tuturkeykey - and many just simply won’t be able to make the budget stretch so yes it will loose votes even if by abstention.

then labour spent this week trying to woo the city. Any work they are doing there is destroyed by the policy.