VAT on school fees not applied retroactively- ultra wealthy are safe

So if they bought in vat on childrens clothes, you'd be happy to pay that for say, 2 years retrospectively?
No, nor should you. There is always a start and cut-off point.
But hey, the old people are losing their winter allowance, so swings and roundabouts...

You’d think so, but Dan Neidle says that he received reports of schools doing just that.

We said that paying several years’ fees in advance would in principle avoid any later VAT change, because VAT would be charged at the point an early payment is made. We added that we doubted many people would want to do this – but it turns out we were wrong.

We have now received numerous reports of schools promoting the scheme.

taxpolicy.org.uk/2024/05/09/private_school_vat_risk/

This is standard practice for all tax changes. Would be the same if you put in a big order for spirits before excise duty went up but which was delivered afterwards. Nothing out the ordinary at all.

@Imaginaryhairstyle they’ll inherit a lot less than you think once Reeves announces her planned changes to inheritance tax.

Our school positively banned parents from paying in advance purely on basis that it wouldn’t make a difference.
its a very well est school so im not sure this is correct

no school would do that

simply not in their interests to do that

Some well known schools refused to allow parents to pay up front.

That’s illegal as the company can only claim back VAT on goods and services it receives, not those somebody else receives.

(Otherwise rather obviously they could just go out and do that now for a whole host of things, not just private school fees).

It's on all the news channels

www.gov.uk/government/publications/vat-on-private-school-fees-removing-the-charitable-rates-relief-for-private-schools

Where did you get this post? I understand it’s applicable to all fees paid for the point after this date and parents have to backdate.
what is the source of the data and can it be validated?

Have your school confirmed they’ll pass the full 20% on rather than increase their income stream or make cuts? I’d check that before borrowing as many schools I know of aren’t coming close to passing the full 20% on and have been planning for this eventuality for a good few yesrs

Link for this doc?

@Kitkat189
just get a governess & private tutor instead.

Yeah … that’s not going to work.

Of course it won't.

That's like saying if they put VAT back on sanitary products and you'd decided to stock up before the date they do then you'll have to pay the government the VAT somehow.

Bonkers

Awwww!

So sorry you have to stew in your envy quite so badly.

Maybe you can cheer yourself up with the news that the winter fuel allowance for pensioners will be striped away now.

It is against well established legal principles to retroactively apply changes to laws and taxation. Labour cannot add VAT to good or services that retrospectively- total nonsense to think otherwise. Whether paying for years of schooling in advance is sensible is another debate - the school could go bust, or you move area or your kid hates it or gets expelled and you can't get any money back.

@Kitkat189 As a principle please explain to me how this is any different for anyone taking steps to avoid an upcoming tax change, just like when the stamp duty holiday was in place and people rushed to get their house conveyancing through before the rates changed, would you think the same of those people? They did the exact same you are complaining about, took legitimate steps to minimise their tax liability. Same goes for many tax year ends where accountants and lawyers have been run ragged getting corporate deals through due to big tax differences if the same deals completed 1 day later.

Why would anyone that can do so not take up an opportunity to pay less tax than they need to.

@stillavid
“- I know locally to me where there are may privately educated children that many parents who would have been enrolling their 3 year olds aren't any more - they will simply use the outstanding state schools near them and move to areas if necessary for good secondaries.”

I genuinely think this is the crux of the misunderstanding evident in so many threads here. I’ve heard people say this as if it’s a bad thing that wealthy parents will be accessing state education. No! That’s in fact the point - the point is for all of our kids to get an outstanding state education. Private schools are socially regressive. They perpetuate class divisions and reduce the talent pool for top jobs.

you seem to think that those of us who oppose private schools are jealous of other people’s wealth. Personally speaking, no I’m not. But I do think sending your children to private school is a bad choice, for your child and for the rest of us.

I was privately educated and chose not to do that for my dc. They are privileged and yes they will inherit the money I could have spent on their education. But I believe a state comprehensive is the best education they can get, and will set them up for a life in our society, with all of the opportunities they deserve.

I am sure we all feel strongly that we want our children to have a good education. I also want your children to have a good education.

Sounds an awful lot like the politics of envy we hear so much about..

From what Dan Neidle is saying, it seems likely that a school operating its usual scheme of paying a year up front would be OK because it’s a long standing arrangement for a set of fees that are fixed and agreed.

However, schools that have come up with a new scheme where multiple years are paid in advance where the actual fees are undefined could be in trouble, because they are not true pre payment schemes.

Bit late now, you should have paid up front before the election ideally. From today anything you pay up front will be subject to VAT.

I wish people would stop telling what I should think about VAT on school fees.

I genuinely don’t care that you don’t think it’s fair that some people are richer/more prepared than you.