To ask if anyone is clued up on the challenge this week to VAT on school fees?

“Or maybe it’s all the other exemptions that is the outrageous thing.“

Really @BotanicalGreen? - are you really advocating for changing international diplomatic privileges that are reciprocal? Or do you want to harm the UK’s reputation further internationally?

The real question we should all be asking is why do we not have more talented and intelligent individuals in charge of our country? Who can plan and foresee for this kind of very obvious thing?

We all know they are really businesses though don’t we. A bit disingenuous to believe otherwise.

They may do for the first couple of years but that isn't a sustainable model long term and we expect to see schools gradually pass on the full amount.

Most are not for profit, or charities and therefore any surplus is put back into schools eg scholarships/bursaries etc.
Labour is turning them into for profit businesses, look at the language they use against indy schools.

I believe the exemptions are laid out in the 1961 Vienna Treaty.

If you want to go around breaking international treaties, it's a different approach. In a specific and limited way.

So, i dont think it wont happen - but what might happen is schools will absorb a part or all of it - the 3 schools i know of, one is going to absorb almost all of it and the other two 50%-ish percent. My two are in private school and ours have plans to absorb it not sure how much tho - we have already factored in the extra 20% if and when it comes into play. I would do that if i were you.

Or maybe it’s all the other exemptions that is the outrageous thing.

Depends on the school. Some schools in our (affluent) area have registered increases significantly in excess of inflation in recent years. They are businesses after all so it is their prerogative.

@Lookslikemeemaw - HMRC has a whole page on diplomatic privileges and all the exemptions. Go knock yourself out. They are most likely going to have to exempt them from VAT on school fees. It is pretty outrageous not to, look at all the other exemptions they get.

Thank you for that breakdown. Interesting. How much right does anyone have ‘to seek’ something that most people can’t afford? It’ll be interesting to see how the judgement falls.

If private schools meet this challenge by cutting costs, ie staff, then pretty soon what they can offer will not be "worth" the fees, people will go elsewhere, schools close. Outcome is a more crowded state sector with no additional funds from this tax. I don't actually think you need to be an economist to work this out, just have a passing working knowledge of typical private schools, not Eton et al which represent a tiny fraction of the reality. As pp said, most operate on very tight margins and do not make profit. Their costs for employer NI, utilities and pensions will have risen hugely, plus most at least match state salaries so have coped with 5.5% last year and I think it's 6% this year. They need to do this or lose the quality staff which again, they need to attract parents.

‘Diplomats do not pay income tax or wealth tax in foreign countries.’

VAT isn’t income tax though is it? I’m not as up to date on the tax affairs of foreign nationals in the U.K. as you, Araminta. With your level of expertise I can only assume you are a tax lawyer for foreign nationals…
they can deffo afford a small unplift in fees then, particularly as they may not even been paying them in the first place…

Most costs are those which indy schools have no control over eg utility bills etc.
TPS has risen from 7.4% to 28.68% over 20 years which correlates with Labour's disingenuous claim that fees have risen above inflation. If you actually look at the data properly it shows fee rises have been pretty consistent with inflation

Then people need to start saying that instead of the tired old "they don't have to pass VAT on".
Most indy schools have approx 1 term of surplus at any time and live within tight margins. The easiest "fat to trim" is teachers/staff. That's the irony of this policy and is why teaching unions and headteaching unions are requesting a pause.
Fee increases have actually been in line with state teacher pensions and salaries over the last decade.

They technically have to pass on 20% VAT but if they make cost savings they can reduce the underlying fees, which would mean that parents would not be paying 20% more in absolute terms. That’s what people are referring to.

If Streeting doesn’t want fees to go up and impact dc’s education negatively and cause damage to the overall sector then don’t whack a 20% tax on.

Stop listening to Labour parrotting the same tired 1 liners and think logocally.
If you really look at the data, schools have put up fees along the lines of state sector teacher pay rises.
Fees pay for teacher salaries + pensions plus utility bills, all of which have risen massively for everyone. 75% of fees go on wages. I don't object to increasing fees annually if it means being able to pay teachers their salaries and pensions. I want the teachers at DDs school to be rewarded for the work they do.
Most indy schools aren't sitting on high reserves, and already run on tight margins.

Legally they have to pass on the full 20% because that's how VAT works. You don't see shops not passing on the VAT charge do you?

As Wes Streeting has said this morning … private schools have been putting theirs fees up exponentially since 2010. What they need to do, like all other schools, is but their cloth according to thier means. They could cut spending by 20% and not pass any of the road into parents.

It is considered a shit policy by many including those in state teaching + SEN charities

The key words here are ‘indirectly’ and ‘it will likely’. The majority does not consider themselves to be directly impacted and nobody knows what the impact will be yet. It is considered a niche policy by most.

If you have DC who are genuinely grammar school material, there is absolutely no need for wall to wall tutoring. There are equally bright state DC who will hold their own for places.

The list of people you’re ‘subsidising’ grows longer with every comment.

You are missing the point. Diplomats do not pay income tax or wealth tax in foreign countries.

This tax is not a VAT in essence although they are desperately trying to call it that. It is a hidden wealth tax, without actually calculating people’s real income and wealth. Because HMRC does not have the resources to do that. It is a sham tax in essence.

Of course they’re complaining. Because their diplomats are complaining at them. But the idea that diplomats, many of who are already getting free or subsidised places in these schools aren’t going to be able to afford VAT, is quite frankly ludicrous.
Half of them are already getting free accommodation to go along with their big salaries, subsidised UK life…
I wouldn’t move to another country and then expect to be exempt from their tax laws, just because of my U.K. passport

To add to @Mrsbabbecho ’s list: in our area of London it’s the dawning realisation of people who had bought in a grammar school area and / or who were assuming siblings would follow on to the same grammar as big brother or sister : competition for places is now much more intense as parents will be switching from private to grammar. And these former private school parents have the money to pay for wall to wall tutoring (as it’s a tiny investment compared to half a million pounds in fees saved for 2x dc)