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.

And this couldn't be done without increasing state provision. Lots of parents couldn't long term afford a 20% rise in fees so would have to place children in state schools. Where I live they are already over subscribed. I don't mean the good ones, I mean ALL of them. Classes on 35+ in the infants. We desperately need more state provision but there are no plans to build more schools here.

@Merryoldgoat ?

Sorry @Merryoldgoat that should have said why?

@Merryoldgoat but it’s not the school who will pay VAT. It’s the parents who will pay it on the fees.

@TullyApplebottom I'm not disputing the right to choose a private provider but our model is that people pay tax on services. Private healthcare, private security, private transport. No where else I can think of do people argue they shouldn't pay tax on a service because there is public sector provision in place.

I just don't get why it's different.

Because we’re not really charities - we exist (in the main) to create profits (after providing education of course). Yes, they aren’t distributed to shareholders but they allow us to accumulate wealth and assets that don’t benefit many people.

Successful schools making a surplus should pay tax.

I’d exempt schools that are for the provision of special education of course.

My point isn't about the minority, it's that private education is a luxury only some can afford and we have a model that says it's appropriate to tax luxury goods and services.

Charity services that are provided free can't be taxed by the person paying.

@LillyDeValley

Currently we can’t reclaim VAT on purchases.

If we had to charge VAT we’d adjust fees to take into account the VAT we could reclaim and take a lower surplus so parents don’t see any real increase.

We’ve already modelled this successfully without any significant impact to our bottom line with current surplus being exceeded within 5 years after changes.

How the fuck can you compare a private school to the RSPCA? 🤣🤣

@Merryoldgoat I work for an independent school too and I disagree. My school is old, established and not at all cash rich. Many of our parents would not be able to afford 20% more and the school couldn't afford to lose its charitable status. We'd close, which would remove provision for a large number of kids, many of whom are not top drawer academically but thrive in our small, close, friendly environment. I think our school is much more typical of most independent schools than the stereotype of Eton and Harrow.

But it isn't always a luxury, as has been explained on this thread. It would disproportionally impact disabled children.

It's more complicated than that though - plenty of private schools help kids with ASN who didn't cope in mainstream that aren't specifically special schools.

I agree.

I think mumsnet has quite a fixed opinion on what a "typical" private school looks like. And its nothing like the reality, particularly outside of London.

@Merryoldgoat really? Most schools spend 70-90% of income on staff costs. Surely you would have to be making big capital purchases each year to mean you offset the vat and not pass on?

if we're driving private schools closed with an actual plan to increase state school diversity, halving class sizes plus giving home schoolers and flexi schoolers tax breaks I'll be on that picket line.

But if it's just some vague sense that you'd like even more abysmally failed kids in your classes being disruptive to meet a sense of fairness then...

This makes a lot of sense to me.

I think the "local charitable activities" thing is a red herring. We have several highly-regarded private schools near where I live, who offer "extra resources" to local primary schools, which are insulting and embarrassing, and certainly not what they'd offer their own kids. It's so clearly a tick-box exercise about "local charitable activity" which uses state school children as props, rather than a real exchange.

I do think independent SEN schools should either remain charities, or be brought into the state system to be fully or properly funded. I have been surprised by the mention of these schools here as my experience has been of witnessing the opposite: families where the expected thing is for all the kids to be sent to a high-end private schools, apart from the disabled kid, who is sent to a state school because that's where its possible to insist on proper disabled provision, and the private schools don't provide that as it's too expensive.

I think parents and caregivers ought to be able to send their kids to whatever schools they like, but if those schools are outside state provision, then they shouldn't be subsidised by the state in the form of charitable status.

We pay about 50% income in salary costs.

Our biggest costs aside from staff are catering, transport and premises, a lot of which would have VAT to reclaim. Plus recruitment and capital etc it’s a big chunk.

Wed not be unscathed but we have plans to weather it.

Worrying about private schools having charitable status just comes across as petty, jealous, and small minded IMO.

They are educating children, saving the state sector a fortune, and they don’t make huge profits.

@greywinds @Thebeastofsleep do you have any data on the disabled and SEN children in private schools, I've looked and can't find anything.

Whilst I can believe that there are some parents who scrimp and save to send their SEN children to private school because they can't get an ECHP I don't buy the idea this is the typical private school parent.

A tiny number of low income families do this but among high earners (£300k +) 60% of kids go private.

The income you need to have a spare £15k for private school is a high income.

Meanwhile 40% of EHCP kids get free school meals.

I know that my school has a very small surplus left over after salaries, pensions, upkeep, resourcing etc. Our facilities are actually pretty dated and dire compared to some local state schools but what we do have is v small class sizes and pastoral groups of less than a dozen. A day that runs from 8.0-6.30 with 3 meals provided if needed, over a hundred extra curricular clubs and so on. The tiny surplus we have is ploughed straight back into direct benefit to the school site, facilities, improved SEN provision etc. There is literally no profit in the traditional sense being made and as I say, that is MUCH more typical of most indie schools than what people think.

The provision of education is in and of itself charitable in law and has been since defined in the early 17th century. Nothing to do with social equality.

Unfortunately because the mainstream offer from the state is so narrow,I don't believe for one second private education is causing huge issue's.

We need more variety of school not less.
Having said that, I do feel that they need to do more for the local community, give more scholarship's, do more out reach etc.

State provision has woefully provided for one DC and I have to pay to fill in the gaps.
The other is catered for only by grammar.

My DS has an EHCP (he has ASD) and has been educated in mainstream private school throughout.
in the early days thst was because the state sector simply refused to accommodate the provision he required. Now it is also to do with the fact that the particular skills he has are far better catered for in the private sector. Plus they deal with bullying robustly.
the state won’t support kids like mine properly. It just won’t do it.

Schools are only allowed to be charities and be taxed accordingly if they operate as charities. Can you explain why you think that’s a subsidy? It’s surely more a question of being taxed according to the sort of creature you are - provided you meet the requirements.

I've said on previous threads that if these schools want to retain their charitable status, they should raise funds on high streets with collection boxes, or are they scared or ashamed of trying it.

It is also noticeable that the charities are often not registered with the school name. It may be easier and less shameful to raise money for the "New Children's Sport Facility" than for xxxx private school.

Many private schools also receive gifts and donations. If the donors are UK taxpayers then the government gives them an extra 25% through Gift Aid.

£8.5m was donated to Eton in 2018 - worth about £62,000 per pupil and Gift Aid could have added another £15,500 of taxpayers money. Compare this to the £7,000 average funding per pupil in state schools.