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.

Dd's private school is about 11k a year, which will increase (currently) to about 15k a year for secondary. By the time we get to secondary it will probably be a lot more but there are many private schools that are no where near 30-40k. I suspect most aren't but when people think of private schools they think of the likes of Eton and the people who tend to go there and wonder why they should subsidise them. It's a purely populist policy, which is worrying considering it's coming from labour.

We are barely managing the fees as is (and won't be able to afford sending dd2 private) but felt we had to do so as DD just didn't settle into her state school and was desperately unhappy there. If the fees increase substantially I don't know what we'll do. I grew up in a country where private schooling is virtually unheard of and I still feel it goes against my principles but your children's happiness is more important than your principles. However, if we can't afford the fees dd will have to go to a state school just as everyone else who can't afford private school fees so it's not unfair. But that doesn't mean it makes sense or is a good thing. For anyone.

We have a number of local private schools. They do the absolute bare minimum in order to be a "charity". They offer a number of bursaries which cover up to 40% of their fee's - only about 5 bursaries, and covering 40% still leaves it WAY out of reach for most parents.

I believe if a school if a charitable private school, then the loop holes need tightening up, but they need to do more than the very bare minimum.

Let’s be honest - this policy is nothing more than a perceived populist vote-winning policy. Even the optimistic estimates about how much money will be raised from the policy amounts to around 1% of the state education budget. Let’s not pretend that, by taxing private schools, state schools will miraculously improve.

It was only 4 years ago that the Labour Party voted at their conference to abolish all private schools and reintegrate the assets into the state system. I think they may have overlooked the human rights implications of this policy. Once they realised this wouldn’t work, they announced that they would abolish charitable status (not realising that this would have no impact on the VAT status). They’ve now abandoned that idea because they’ve realised that wouldn’t be possible. They’re now pledging to impose VAT on private schools. They are scrabbling around to find a way to harm private schools.

The main Labour Party flagship policies at the moment seem to be harming private schools and getting teachers to clean kids’ teeth. I think we can all agree that they’re an are bigger problems with the country to worry about.

This policy won’t harm the truly wealthy. Those parents won’t notice a few thousand pounds a year. The more expensive, higher profile, schools won’t be affected as much because they have huge capital expenditure on which VAT can be claimed back. The parents it will harm are those already stretching themselves to fund private education, often for children who have been failed by the state system. The schools it will harm are the smaller more nurturing private schools without all the flash extras.

I cannot possibly understand why any political party wants to attack a very good education system - a system in which many children thrive and have a wonderful school experience. It’s a system which is recognised internationally as being good. Why do we want to get rid of that? Let’s concentrate on making state schools so good that people don’t want to use the private system.

Clamping down on tax evasion (very different from tax avoidance) would raise billions a year; much more than taxing private school parents. That would involve hard work and effort to sort out though.

It concerns me that the Labour Party are so focussed on attacking 6% of parents and children for a relatively tiny tax gain that they are overlooking the bigger problems.

There are farmers leaving the land they had for generations.

There’ll be even more farmers leaving their land if the reports that the Labour Party are considering scrapping agricultural property relief are true.

teaching in a state school often offers better pay and conditions

Why have state school teachers been on strike? I thought it was about poor pay and conditions?

Very few private school teachers will want to switch to the state sector even if they’ve taught there before. They’re more likely to take early retirement or move into a different job. There’s increasing demand for private school teachers internationally now as well.

I have been struggling legally in my head with this proposed policy for some time and it also evokes irrational deja vu of Brexit in me (because of the contravention of EU law).

However, more than rationally I am really struggling with this policy emotionally. How is it OK for a government (especially a professed left leaning government) to incite hatred towards any school children, including some children with disabilities? What if children in private school uniform end up getting beaten up after such vilification by the press? I just cannot stand for such a policy.

It reminds me of the eternal question should a society have capital punishment as a deterrent? It is a deterrent policy inciting hatred towards a certain group of children. It is revolting. Children do not in most cases choose where their parents send them to school.

I am also quite interested to know how private school teachers feel about the policy and other workers in the sector who would normally vote Labour.

There’ll be even more farmers leaving their land if the reports that the Labour Party are considering scrapping agricultural property relief are true.

Yes. I think the Labour Party hates farmers nearly as much as it hates private schools.

I suspect that you’re a bit optimistic about the number of these teacher who would stay in the profession or even in the country.
The staff at my Dds (fairly ordinary independent school) have been recruited from all over the place, international schools etc. I believe that a lot of them would simply go and find somewhere else to be.

Our local private schools made a big thing locally of offering their sports facilities for local children to use via their sports clubs and Scout groups at a token cost to prove their charitable ways.
It seemed like every other week it was cancelled as they needed it themselves or made out the weather was too bad (one black cloud in an otherwise blue sky)

I’m state sector teacher myself and I my heart I’m a bit of a socialist. I strongly believe that changes that force independent schools to provide more burserys and to share their facilities and training with other local schools should be put in place. I’d vote for that. But this has the potential to destroy my DDs lovely school (extremely important for our family right now).
Certain things labour stand for right now make it very hard for me to vote for them.
We’ve got to choose a new mp next week. The Lib Dem candidate is looking tempting.

Unfortunately, by financially penalising private schools, bursaries and financial assistance are likely to become even more difficult to obtain. The policy will make private schools even more elite.

It’s also worth noting that Starmer said, only a couple of weeks ago, that he had no desire to diverge from EU law. Imposing VAT on education will do exactly that.

More would be raised if VAT were added to university fees as EVERYONE would be forced to pay. I think that’s Labour’s real agenda - removing charitable status for private schools is just a test.

https://www.st-gerards.org/fees/

One near me ranges between £9k for infants to £13.7k for upper secondary. Those are day fees of course and that's at the lower end of the scale.

How do you define wealthy?

I think that's a really good summary, as well as the PP who referred to it as a jealously tax aimed to win cheap votes by vilifying 'the rich' without fully understanding the implications of what they are voting for

You’re assuming that most private school teachers will happily apply for jobs in state schools….

Sorry, I was trying to quote another poster and failed!

“Whereforartthoudave · Yesterday 20:39

Most of us don’t use private schools and most of us are sick of the tax dodging that the wealthy are so good at”

This one is the height of it - most people paying for private schools are 40 or 45% PAYE tax payers and funding the lifestyle and in work benefits of others in society, not the other way round. Many of those higher rate tax payers have children with more hidden disabilities, things such as autism, dyslexia etc. On my team, in my law firm, we have several colleagues with autism who pay those kind of taxes. Some of their children also have autism and go to private schools (autism can be genetic). That is the way their children will eventually also become higher rate tax payers. They are very clever, but bullied and struggling in the state sector (noise, rigid discipline, huge classes, being bullied for being bookish/nerdy). There are so so many kids like this across the UK. And many of them are actually going to be really productive adults one day, if supported properly now.
Under diagnosis of autism in highly academic people is a thing.

On the other hand, if there is an exemption for SEN in the legislation, it will open the floodgates to people seeking private diagnoses all at once. Same people who previously just paid up and made do. That can in turn indirectly pull resources away from the NHS and those who really need the state funding, if the mental health professionals work in both sectors.

From Google:
“What percentage of Cambridge students are autistic?
12% of Cambridge students are on the spectrum, compared to only 2 to 3% in the general population.2 Nov 2018” (in a rush currently, can’t get to the best source)

I think you maybe missed the point, I am saying that these would be natural ways for parents, in any situation, to think about educating kids. We take it for granted they go to schools someone else set up, but in the past most schools were set up by groups of parents, or community groups like churches, seeing a need for children under their care.

For the state to tax this kind of enterprise is stupid.

The whole thing is about class hatred in the end which is a poor approach to policy.

Such an interesting thread. I hope the female Labour MPs are reading them!

It might be worth a quick clarify, (apologies if you have worked this out…but some people haven’t:)

• charity status means you don’t pay income tax, or business rates (200,000 pa), but you have to provide some help to other schools/bursaries etc.

• not all private schools are charities, a large percentage are businesses.

• It is legally very difficult to unravel the covenants surrounding charities, so Labour have turned their focus on VAT.

• VAT is not payable on education (says EU). But now we are not in the EU so…

• Labour wants to tax school fees paid for directly by parents.

• the private schools are already thinking about how to reduce this effect, but there is no money tree so in the end the parents have to pay for through their fees.

• labours assumption is…what exactly? I can’t work out if he wants the private schools to close in the name of equality, or stay open and feed the coffers. The latter means it’s just a tax grab, aren’t there more lucrative ones?

Our school will likely pay by reducing bursaries as they won't want to bite the hand that feeds them.

These threads bring out the champagne socialists at their worst!

Private schools have been raising fees by way more than inflation for decades (my school which was £700/term in the early 80s is now £8,000/term) with nary a complaint from parents, but a one off raise of 10% or so to help others is met with total apoplexy.

Ask parents for £3,000 for a ski or netball trip, or to contribute a few thousand for a state-of-the-art technology centre, and it is also not generally an issue.

And the vengeful posts about how bursaries will be the first to go, rather than any luxuries, are the worst. The realities are that most bursaries are not funded out of general fees but from hypothecated donations from generous alumni and bequests.

Of course, some will struggle and a few will leave (1/14 according to the IFS) but, for the vast majority, it will make very little difference to their disposable income.

According to the HoC report and the ISC, '70% (978 out of 1,395) of private schools are charities. However not all private schools are ISC members.'

More than half of all independent schools are thought to have charitable status.

I just cannot get over how out of touch so many private school parents are! I send my child private due to a minor sen need which is completely ignored in state school and easily met in private school. Yes things are a bit tight but if we can stretch to private school we can stretch to the VAT too. If things we so tight that we couldn’t afford an extra 20% then we would have deemed it unaffordable in the first place.

to send your kids to private school you have to be wealthy, no question about it. Why are so many of these wealthy parents though wailing like banshees at the prospect of an extra 20%? Jeez guys, read the room here! Public services are on their knees. You can afford to cough up some VAT on what is UNDOUBTEDLY a luxury!