Private schools and charity status

[The6thQueen]

Yes, another thread. But, maybe from a different angle?

I'm interested to know how many mumsnet readers know that most universities are charities or are charity exempt (including Oxford). That we don’t pay VAT on university fees, or services from healthcare providers (including non registered, if they are supervised by registered healthcare), including pharmacies and, that private healthcare suppliers fall under this exemption.

I’m raising as Labour’s altered plans with regard to charity status and taxes for private schools may be far more complicated than the public expects. Legalities and the far reaching impact the policies may have beyond education and its VAT exempt status.

I suppose my AIBU is that most of the general public don’t realise the use of charity status and VAT exemption and how removing them from the private education sector is not that simple.

Good, hopefully it wont happen then. Its a bad policy and i'm saying that as a committed labour voter.
No i don't think yabu as many people don't understand the inner workings of such things.. they often pluck an opinion from the breeze on these vital matters

I’m inclined to agree, but know that’s not a popular opinion on here!
It’s yet another example of reactionary politics, that’s not thought through and relies on people not knowing the realities of the proposals.

Along with taxing small businesses inheritance tax. They're a bunch of idiots who plan to destroy what little is left. Schools will be much worse off, less people will want to teach, hence all kids worse off and the small businesses will have to sell up as can't pay the tax on generational hand over.

We need a businessman to run the country not a stupid politician who knows nothing about how to run anything.

Its a bad policy and i'm saying that as a committed labour voter

Agreed. A school is not a business, isn’t making a profit for shareholders, shouldn’t be paying tax and should be able to invest in its own facilities. It would be good to see greater clarity around bursaries, assisted places, free places as well as monies raised and given to charity, I think.

private schools are businesses, and it is right they pay VAT

I think applying VAT to anyone who delivers education is a bad idea.
10 years time - uni fees will have VAT on them….but hey, don’t worry, you can borrow that too!

There are too many schools in the country to staff them all, private schools closing because of this will be very good for the state sector, as the number of children changing to the state sector will be more than compensated for by the increase in the pool of teachers to fill state sector positions.

Many teachers mix time in each sector throughout their career, but teaching in a state school often offers better pay and conditions, and staff who are in a bit of a rut in the private sector would benefit from the freedom too

@fattytum, then so are universities and privately owned pharmacies (as most of those in the UK are), should they pay VAT too?

If not, why not? Not goady, just trying to understand why? Universities make far, far more than most private schools (except perhaps the very elite public schools, who don’t generally have exempt status anyway). They are privately run institutions, not publicly owned. Should they remain exempt, and, if not, how will students pay the increase of 20% on their fees?

Universities are open to everyone who meet their entry criteria. Private schools aren't.

Labour aren't intending on removing the charitable status of schools. Just adding VAT to fees.

I do wonder how the legislation will be written because presumably it will be that charges for educational services are now VATable. Presumably that will have to be much broader than just private schools but also cover tutoring, online education services used by homeschoolers etc. because at the end of the day home schooling and tutoring is private schooling. If you’re making exceptions they have to be reasonable. It can’t just be “ all schools called Eton have to charge VAT”

I mean I’m sure they’ve considered it but it won’t be easy.

students dont pay their full fees back now, do they. Its a graduate tax, and will remain so.

But the difference is that there is not "state" alternative to unis, and the uni places are the state offering

@fattytum

but many private schools are not businesses- they’re not run for profit and no one is paid any dividends, they’re just run to educate children and all money made is ploughed back into the school.

We should not have tax privilege of any description.

Charities have no idea of the cost, admin burden and stress faced by ordinary business.

It’s a bad idea to have a privileged class of operation with no empathy or understanding for the rest.

Many charities spend time lobbying to make life harder for the businesses who suffer burdens they don’t even think about.

All tax privilege for all charities should be abolished.

@fattytum are you a teacher?
The private sector is not worse pay and certainly not worse conditions than the public sector. They don’t tend to offer the teachers pension anymore (most private schools are pulling out and more will if they add 20% tax), the private sector has historically topped up the TPS to make it viable. I can see it going under within a decade, for many reasons, but this won’t help.
I don’t think you’ll see as many private teachers return to the public sector as you think. Conditions there are awful, they’ll go to other private schools (many will amalgamate to make ends meet) or leave teaching altogether.

Keir Starmer, being a lawyer has studies the law to see if it's feasible, and I'm guessing it is.

Our children's independent school already has a plan, and are expecting to impose a 7 percent increase in increments. We are lucky that it is in a position to do that.

Very good point

Its absolutely disgusting. It won't impact the wealthy, but people like us who literally spend one of our salaries on sending our autistic daughter to an independent school as it's the only school that suits are needs. She has an EHCP and instead of costing the tax payer a fortune to send her miles away to a specialist school, I spend literally my salary on her education and we live on my husband's modest salary.
We are the people it'll impact.

There is Buckingham University.

This.

@R37sraY are you saying that as someone who knows the financial impact that will have on many charities and how many will then fail to function (most hospices who go from month to month) for example?

What are you paying the fees if she’s got an EHCP?! @Nowanextraone

Agreed. Labour tried it last time they were in power and discovered that because of the way charity law works it would be very tricky to unpick.

I feel ambivalent about it. Some schools are very much run as businesses and don't really deliver any public benefit (particularly now they educate a huge percentage of foreign children).

I think the schools do need to demonstrate genuine and deep public benefit , not just a few token gestures

@RedHelenB and @Zampa, yes, I know this. That’s not my point.

My point is that private healthcare providers don’t pay VAT either, including most privately run pharmacies that we all rely on up and down the UK. Nor do universities.

It’s quite a legally complicated change to make. With many challenges private education could use, why them and not universities for example?

But school budgets are stretched as it is? Then you’re adding more students who would have originally been privately educated to already oversubscribed classes? I’m not sure the budgets stretch to hiring all these extra teachers you’re talking about.

To me it sounds like a jealousy tax. Discouraging people from using private education doesn’t make state schools better/provide more money. It won’t discourage the ultra wealthy but it will hit the middle class (as per) the worst.

VAT is not charged on essential goods like milk, bread, even physical books (it is charged on digital downloads). It should not be added to education.

@fattytum they do if they are not British citizens.