Private Schools being able to hold charitable status

[IdiotCreatures]

I went and looked at a building associated with a local independent school yesterday, as it's always piqued my curiosity.
The school is run by the Woodard Corporation. I looked at their books on company house yesterday.
The amount of money moving through them is ridiculous. If people want to pay for a private education, then surely the institutions should be taxed.
Apart from a small number of scholarships, the average person is not benefiting from these institutions.
In the case of Eton, as pointed out on another thread, these schools are probably leading to damage to society and definitely do not promote the idea of equality.

A charity spends all money it takes in on its charitable purposes.

Actually, no. For the big charities, a lot is spent on salaries for management and TV adverts.

So removing charitable status is mainly about putting vat on school fees. Business rates is a much smaller element (I think 1.6 billion and 100 million). As the biggest expense for most schools is staff costs then they could not “offset” against vat much and so would need to pass on to parents.

The thing is it’s one of those things which seems catchy and popular, but when you drill down probably isn’t going to help and could cause more problems:

• so a lot of sen schools are private (and very expensive). If you put 20% on fees then LA will have to pay for this.
• Some Parents won’t be able to afford 20% hike so will move children to state sector. So you won’t get the vat and in fact take more out of the treasury, without putting anything else in
• what about tutoring, clubs etc? All private education. They would have to do the same.
• If you start with education surely you can make the argument for things like private healthcare?
• Round here it will just increase house prices round outstanding state schools further.
• Wealthy foreign nationals could claim back tax
• Private schools become more elite

If you want to get more money for education your best option is to tax at source.

I don't think it's unfair. They are buying a luxury service they don't pay tax on. That's not how things usually work so it's appropriate that we close the loophole.

You pay tax on private healthcare so it just lines up with that.

The argument that you save the system money by opting for a tax-exempt private version of any service is too superficial and facile for anyone to really believe.
The state-school system would be amazing if the resources of would-be private-school parents were directed toward it. Not just financial resources, but time, skills, influence and political pressure.
I'm sure I'd send my (hypothetical) children to private schools if I thought they'd benefit and I had the money. But I hope I wouldn't insult people's intelligence by telling them I was doing state-school parents some sort of favour by going private.

The ugly truth is that parental involvement is a big indicator of outcomes. It’s not just about money. It’s about attitude - like certain groups culturally valuing education, hence their kids do well even if they’re not white and middle class.

People who can pay will organise tutors, music lessons etc or as a PP said home educate in small groups.

The only way of making the ‘local comp’ improve is to pressure the GOVERNMENT to pour more money in. Which isn’t in the hands of most people who can afford private school, it’s in the hands of the rich and elite who won’t be affected by charitable status of schools anyway.

Do schools that are not charities have to charge VAT on fees? I thought education was generally exempt from VAT whoever was providing it?

Charitable status is beneficial to private schools in other ways - it means they can raise funds more easily, and claim Gift Aid on donations, and of course it means they must not make profits which are taken out of the business. Education is generally assumed to be charitable purpose otherwise PTAs (who also only benefit a specific group of children, not all children) could not be charities.

And how do you know £40 a week will be doable?

@DomPerignon12 I agree. We are seeing something similar with the proposed changes in the rental markets - essentially penalising LLs by restricting what they can do with their own properties and wanting them to bridge the gap that has been created by a lack of social housing.

I think wealthy/high income individuals can oftentimes be penalised when people perceive there to be some injustice, inequality or a shortfall of any description and automatically turn to those with more money to fix it.

It wouldn't be fair or reasonable to remove charitable status from PSs with the hopes of improving state education. That's an issue that the government should be considering and identifying resources to manage. It's their issue to solve, not the parents of privately educated children.

The types of ‘community outreach’ some of these schools do to justify their charitable status is a joke. Eg use of running track for school tournaments (plenty of the schools round here could host as they have the facilities ie a large field).

The one that particularly annoys me is the 5-10% ‘bursary’ award, which seems to be a subsidy to parents who are already planning to send their kids there because let’s face it that isn’t going to be the defining reason you can suddenly afford it. The schools round here seem to use it to attract particularly gifted children in sports and music… who are likely to come from a more privileged background anyway (eg need to have parents able and invested enough in sending them to various competitions around the country), plus it makes the school results look better when they can claim to have pupils excelling in various fields. Great marketing plan, but hardly worthy of charitable status.

@namechangeduetoimpatience if your finances are so tight that you can not reprioritise your spending to afford £40 a week, then your private school fees were always precarious anyway.

"so a lot of sen schools are private (and very expensive). If you put 20% on fees then LA will have to pay for this."

You could exempt schools where LA pay the fees although LA also pay the fees that some ordinary independent schools for some pupils.

The simple solution is to have state SEN schools. It is what should be happening anyway.

Other businesses pay tax bases on the income they generate. A school is not ‘a money making business’ if they are a charity. Any ‘profits’ have to be reinvested, they can’t be removed or spent on anything other than the school.

The problem is that state sen schools as they exist now, are not specialist enough for children with the most complex needs. The state sen sector would need to change enormously. Ds's school takes children from hundreds of miles away.

I think it is a difficult one to have blanket policy on. Lots of SEN schools are private, but most children are funded through the LA as the state schools cannot meet the needs of the child, particularly those with profound disability or needing physical support (lifts, accessible changing facilities etc).

But equally lots of the children at these schools are privately funded because their parents can either afford it and can't be bothered to go though the very difficult process of EHCP or can make the sacrifices necessary to pay until an EHCP can be organised.

Charitable status has absolutely nothing to do with VAT.

Education is exempt from VAT (that includes training courses, professional qualifications etc).

Where registered charities charge for a service that would be VATable they have to add VAT just like any other business (assuming they have non exempt income over the VAT threshold or if they have voluntarily registered ).

Removing charitable status would just mean a tax on profits. A lot of private schools get donations from alumni, so if charitable status was removed they could presumably set up a charitable trust separate from the business to fund bursaries (just as school PTAs are charities).

If VAT was levied on education it would affect many more people than just those paying for private school. University fees would go up 20%, as would professional qualifications etc.

Thank you for mentioning this. So often people overlook or ignore the SEN independent sector and it’s critical in helping kids get proper provision.

In practice you’re highly unlikely to get a place in such a school unless it’s specified in an EHCP. There just aren’t enough of them.

What happens to the money the state saves by not having to educate theses kids in private school

That's besides the point. If I decide that my child's needs are best met by an independent school and I choose to make the necessary sacrifices to afford it, you dont get to decided how much more of a burden I should carry.

Not every independent school is like Eton and not every independent school parent is filthy rich.

The state-school system would be amazing if the resources of would-be private-school parents were directed toward it. Not just financial resources, but time, skills, influence and political pressure.

I’m considering private school. I have none of these things (other than some limited financial resource that could be directed at paying for education) and I surely can’t be the only one.

Apparently its none of our business

The notion that somehow the state education system would become more responsive because more middle class parents send their kids there is laughable.

Bursaries at DC's school are substantially more than 5-10%, they need to be, as to be considered for a bursary, your household income needs to be under £45k.

Sports and music scholarships are more like 10%, these are awarded more as a recognition to the child's ability, as opposed to being meant to provide substantial financial assistance.

DC's school have given places to 12 Ukranian refugees over the last couple of terms, with all uniform and other associated costs fully funded by the school, i.e. full bursaries, as they rightly should.

And I don't have time, skills, influence and political pressure to help with the local state schools either, I'd just redirect the money saved on school fees to move next door to the best state school I could find.