VAT and Bursary impact

The school where my DDs are studying offers a bursary program. I have already suggested closing the program to the headmaster.

i can’t imagine what the fees will look like once kids move there

planning our exit

Got to fund KH somehow - should planning permission ever be granted

Dukes education is absolutely for profit, they made some stupid fees increases with nothing to back these up with

they also sent a childish letter in response to Vat decision last week

the only reason I don’t regret accepting that 11+ offer is because now I know what a awful, entitled , money grabbing school looks like .

You’ve become hung up on a particular point despite it being utterly irrelevant to the reality that some schools are owned by Private Equity and similar structures in order to generate a return for their owners.

Whereas if they have charitable status there is no such return because any surplus is taken to reserves for later investment in the school.

I’m certain you don’t understand it but it doesn’t make you right.

Our tax laws are so complex that what has happened is that private equity companies have found ways of buying private schools and then I suspect they structure their companies so that they comply with the law. If there wasn’t profit to be had, private equity companies wouldn’t bother or sniff around.

Not sure how that relates to my statement that in the UK all of the private schools as per law can not have " for profit" status as a business entity.

The size of the salary and the amount of staff etc is discretionary. Surely you can see the shades of grey there.

Absolutely. And I have never questioned anybody saying what you stated above.

I am just absolutely tired of people here saying that private schools are for profit. Not they not. It is not allowed in UK. They all have status as not for profit and charities.
But it doesn't mean they cannot give the directors an obscenely large salaries.
Yet this cannot be called profit

The rest of your post - I don't understand why you telling me that. Did I ever stated that I am against VAT on private? No. I am just trying to explain few people that in UK all private schools are not for profit because that is the law

And turnover is revenue or in this case fee income, not profit plus expenses - though they will sum to the revenue number.

Companies cannot control their revenue but subject to any interest from HMRC they can control their costs and indeed choose them and structure them to achieve their own ends.

This is agonising.

I didn’t say fee income was profit. I said the majority of fee income came from the UK, I,e, from UK private schools. This was so you didn’t say it was from oversea private schools.

I assume you’ve read the accounts, at least the income statement? And will note that Dukes is generating positive EBITDA. This then turns to an operating loss primarily due to a large amortisation charge and financing costs because the company is leveraged to reduce tax. The former is non-cash, the latter due to structuring the debt to achieve a particular end.

You are wrong. And Wikipedia is not helping you.

That particular bit of googling says that the ISC is a not for profit organisation. It doesn’t say anything about Dukes

@PeachSalad "re-invested in school, salaries etc"

Profit is what's left after you pay the costs. Salary is one of the costs. They don't charge fees intended to "make a profit" they charge fees calibrated to the costs they predict to cover. The size of the salary and the amount of staff etc is discretionary. Surely you can see the shades of grey there.

Anyway, something like 93% of students are state-educated.

Yet over the past decade, the gap between private school fees and state per-pupil spending has more than doubled (in England). The London state secondary my friend's daughter attends used to provide laptops to students on FSM, but took them back because they could no longer afford the scheme. Where were the local private schools and their charity then?

I don't accept that private schools shouldn't have to pay VAT. The inequality is too stark.

And Dukes Education is backed by Private Equity by the way.

This article is referring to profit making in the state sector. Not in the independent sector. Are you confused because free schools and academies are technically ‘independent schools’ ? These schools are not allowed to make a profit

really, trust us on this one. Profit making is absolutely allowed and there are plenty of institutional investors in the private fee paying school sector. They aren’t in it for the philanthropy.

@PeachSalad I don’t know how to put this differently. You. Are. Completely. Incorrect. Profit making and taking is completely allowed unless you have charitable status.

@Boater
Dukes Education is not for profit as all private schools in UK. At a higher education level only exist some private, for profit.

Income does not mean profit. Every private school has an income. But the profit has to be re-invested in school, salaries etc

Dukes Holdings is an organisation that have salaried directors implement their duties under section 172 of the Companies Act 2006. Salaries are not profit but income in return of work. Directors are in the board and they appoint a headmaster.

For profit organisations are e.g. private entities ( owner takes profit to his pocket and if his companu bankrupts he also does), partnership ( non limited because there are also limited) and corporations ( the profit is sold as shares)

Schools in UK are not allowed to be for profit. They can be registered as charities and as not for profit organisations. They are managed by the boards ( salaried or not)

https://www.independent.co.uk/news/uk/politics/forprofit-schools-have-no-place-in-britain-says-tory-education-secretary-nicky-morgan-10257148.html

Independent doesn't mean for an individual profit. Please make an effort of reading this article because you are wrong

Turnover is profit and expenses. Profit is after the expenses.

In the private schools the profit doesn't go to the private owner because they are " not for profit " organisations. It is invested in the school, students

SEND is a complete racket. I was having a discussion with a parent whose child receives 90k+ per annum of EHCP funding to attend an autism specialist setting, granted that may be the only suitable local placement for that child. He was ardently pro VAT, no other experience of the independent sector and was convinced that any school charging less than 90k is substandard. Looking at the schools accounts was very interesting!

I find it absolutely obscene that local authorities can justify that level of spending on ONE child. And as awful as it sounds there has to be some checks and balances. Spending over 500k of taxpayers money, educating a single child whose outcomes aren’t guaranteed doesn’t sound like a good investment to me.

Taking as an example the profit-making parts of the independent special schools sector, several are owned by sovereign wealth funds or other large private equity firms. And profit making is not limited to the independent special schools sector. Any independent school that is not a charity is wholly permitted to make healthy profits.

@PeachSalad you need to use better sources than wiki. That is just plain incorrect. For-profit schools are absolutely allowed in the UK. If they are independent and not charities.

Knock yourself out https://find-and-update.company-information.service.gov.uk/company/14268725/filing-history

The 2023 accounts are 63 pages but the revenue note shows the vast majority of fee income is from the UK £200m versus total revenue of £230m.

I wasn’t sure about for profit, so I googled it and very quickly came up with the following articles.

This article is how private equity firms are making money out of the SEND sector.
https://schoolsweek.co.uk/how-investors-are-making-millions-from-the-bankrupt-send-system/

And a quick google about for profit education in the UK showed this, an old article, but they are still going and have been bought by another education company.
https://www.ft.com/content/4756c4b0-a5c4-3dd2-adea-fba44cfab244
https://www.crunchbase.com/organization/alpha-plus-group