Confused about VAT and wraparound care

@heavenisaplaceonearth our school includes lunches with the fees but some don’t- on paper some schools appear cheaper because there’s lots of mandatory add ons. Ours is one fee for everything unless you choose to do 121 music lessons.

@FluffMagnet Morher Pukka and others are campaigning for childcare to be treated as essential. Since our world appears to be set up to have two parents working, we need robust, high quality childcare to facilitate this.

Except they are often not part of the school day. Very often on weekends and early morning or after school as part of a club.

Clubs are already subject to VAT.

I think if this is an established afterschool club that's been running long before the VAT they will likely just carry on as before. I think it's schools trying to change their hours of normal school to Saturday or the evening to avoid the VAT that they're trying to catch.

They've got in the right way round, alright. They're happy for the private schools to act as babysitting services while the parents are at work earning the cash to pay 20/40/45% tax, but try to teach them anything and that'll cost us another 20%. The State doesn't exist for us. We exist for them. They look at us and our children and only see pound signs.

Except they are often not part of the school day. Very often on weekends and early morning or after school as part of a club.

This is ridiculous. If anything is a "luxury", it is using fancy facilities for wrap around carr, which is not essential (I get it is a primary concern for working parents, but it not the essential purpose of a school or mandated by law or government). However, it is essential that all children between 5-18 get an education. That is not a luxury.

This seems to have everything the wrong way around. Optional extras seem to be exempt and essential education is caught! I am massively against the policy in general, but given this topsy turvy wording proves beyond doubt this is an attempt to just punish children deemed too wealthy, I have as much sympathy for state parents caught by accident with any of their extra-curriculas or childcare as I do private parents struggling to pay. Labour clearly want to dictate that no child experiences beyond the most minimal of educations, therefore lowering standards across the board rather than raising us all up. A worrying indication of times to come in the state sector.

Well yes of course they’ll now have to charge VAT - how else did anyone think they’ll find any money?!

Stagecoach may be eligible for VAT if the company earns enough, but I can also pay for it through tax free childcare, just like afterschool club. What about Sat drama club at school? Am I going to have to pay VAT on that? How do they decide what iq educational, and what us childcare? Many holiday clubs are sports, dance, drama or art classes.

OP posted a screenshot on page 1 that says welfare services are exempt from VAT. It specifically says breakfast clubs and wrap around care will remain exempt. Section 2.16.

Section 2.17 covers things like Stagecoach which apparently are already eligible for VAT if the provider is VAT registered.

If they stick to this it's pretty clear cut IMO

Surely in which case the hours for PE lessons while at private school should also be exempt

No because during the school day they are provided with an education. It's a formal lesson forming part of the school day.

I'd also suggest in this specific case that the teachers that work for the holiday club probably have separate contracts of employment, with the holiday club probably operating as a separate entity.

But probably.better to ask in September!

You're best of asking the school if their wraparound care is "educational" or not. Then you'll know

One of the reasons for everything being included is to prevent evasion/avoidance schemes.

if you don’t include wrap around card provided by the school then the school fees can be reduced and the wrap around fees increased. This removes the vat problem.

So instead of £20k fees (plus £4k vat) plus £3k attributed to wrap around, meals, holiday clubs etc you structure it as £10k fees (plus £2k vat) plus £13k on compulsory extras. Saves £2k vat. Obviously these figures are extreme but it demonstrates why there are unlikely to be lots of exclusions.

Surely in which case the hours for PE lessons while at private school should also be exempt.

The whole thing is just a mess, which will be full of loop holes and therefore probably raise less than it costs to bring in.

They either need to blanket apply it or just not bother,

I imagine OP Will be told in September to give a term’s notice of any changes. I imagine a lot of school accountants (whether internal or external) are hunkering down now the detail is known and weighing up the implications eg is the footbalL once a week VATable and, if so, should that be split out and charged separately or whatever.

Although schools will have run scenarios, now we are into the detail of planning for the actual words of the rules.

They have said that childcare won't be taxed but boarding is (which surely includes childcare). Meals won't be taxed (unclear if meals in a boarding house would be). Educational activities run by a private school or closely related provider outside the school day will be taxed so presumably swimming lessons run by the school will be. Unclear if a private company renting time in a private school's pool would be - may depend on their turnover.
I imagine schools will be pretty desperate to raise revenue anyway they can which would include raising charges to rent out their facilities.

Just ask the provider what your next bill will be for Jan 2025. Surely that’s simple?

Sorry OP, but many people live in areas with private companies running wraparound care and clubs. It is what it is.

@mouseyowl

Quite - no rushing here. Several scenarios modelled and we knew it was coming for over a year.

It's hardly been a secret that it was coming.
Obviously the nuts and bolts haven't been revealed yet but a school 'rushing to respond' isn't run very well!

I run the finance team for a private school.

I haven’t got across all the technical guidance yet and I’m waiting for The ISBA and Farrer’s to give their briefings so can’t comment on the VAT yet but it’s very common to charge fully inclusive fees and not to include additional charges for trips and lunches - gives us more flexibility and is easier administratively.

Never seen it charged separately so some must do and others not so.

But did you vote for Labour?