If VAT is added on Private School Fees, then it will be added onto University fees as well

[AgathaCrispee]

Does it worry you that this new policy of adding VAT on educational fees will also be applied to university fees as well?

AIBU to think this will put university out of the reach of the majority of families who will support their kids through Uni?

Also, for those who do go the level of debt they will come out with will be really big.

If they can apply VAT to private school educational fees then they've setup a case for Independent schools argue that it must be applied to Uni as well.

Is this going to create a situation where only the wealthy can send their kids to Uni?

I'm wondering why no one is asking this question!!

Why is anyone surprised that there is such low confidence in politicians of whatever ilk? Is it not documented that public confidence is at an all time low? What are Labour going to do about restoring confidence?

Spell out the policies in detail please. We already have Brexit trauma. And Covid PTSD from random rules and policies. Of course we are not going to have blind faith in a moral tax and believe there won’t be unintended consequences. This is an attack on children and the Education sector at large.

It’s simply not going to happen, so you’re going to have to live with the terror of VAT on university fees.

They are as hopeless on a few issues

And we also have uni trauma because our places are being sold abroad to the highest bidder, that is a fact, well documented in even the most basic of newspapers.
That does not mean we do not have sympathy for squeezed academics and lost EU funding. It does not mean we disagree that academics should be paid more, for example. Our unis are so important, it is one of the things this country still does well. So it is important to ask what is going to happen to tertiary education going forward when a new Government is adopting a gimmicky moral policy on a part of the Education sector. What next springs to mind?
Education is big business and a huge cost, just like health and questions need to be asked.

Given that the so-called experts couldn’t agree on the VAT treatment of a Jaffa Cake, forgive me for being sceptical about how straightforward it will be to impose VAT on certain areas of education.

“It’s simply not going to happen, so you’re going to have to live with the terror of VAT on university fees.”

So unis that are private profitable businesses won’t attract a sales tax but private schools that are charities will?

😬

This - from a univ lecturer.

The two are not the same. My eldest needed a degree to do his job. He did not need a private school education.

Floating voter my arse.

Haven’t read the whole thread.

Charitable status is a red herring.

The 20% VAT on private school fees would be implemented by changing the current law on VAT which says education services are exempt from VAT.

They would change it to something like “educational services are exempt from VAT except for educational services provided by Schools”.

They would then need to define what Schools means in a way that doesn’t catch universities, tutors, Saturday schools, maths clubs etc etc. This is tricky but by no means impossible.

I’d hope they’d also try to carve out SEN schools but that will be harder to do.

Essentially, the govt can tax or not tax whatever they want, it’s just about getting the legal wording right and then voting it through.

We'll now call this argument the Jaffa Cake principle.

Nailed it 😂

This is exactly what I'm talking about.

It is not simple in the 16-18 bracket surely? Can private schools then split that age group? Given that is where most are?

This argument doesn't work either though.

Would you out VAT on a philosophy degree but not a law degree?

One isn't needed to do a job, but the other is.

This proposal is a sweeping statement, fraught with problems.

Charitable status is not a red herring because they also want to remove the business rates exemption which affects charities more widely potentially as well.

The point is that these kind of changes are going to need proper scrutiny not fly by night VAT Notice implementation. If they want to do this in the first budget they better do the work now.

“It’s simply not going to happen, so you’re going to have to live with the terror of VAT on university fees.”

Next someone is going to say stop worrying about all this nonsense of VAT on Education, they are never going to do it anyway. They just want normal people to vote for them. As not even our MPs can differentiate between the difference between VAT, charitable status and where it overlaps, clearly Joe Blogs won’t understand any of it.

I think this is the crux of the issue. I'm not sure it is simple to write a new rule which
(a) Includes all institutions intended
(b) Does not include any institution not intended
(c) Is not in conflict with other tax rules and open to legal challenge

It is an interesting intellectual exercise to try to come up with such a rule:
(1) VAT on all institutions teaching children between 5 and 18 - suddenly my daughters football club fees are subject to VAT.
(2) VAT on all institutions teaching towards GCSEs and A-levels - suddenly the local private IB school becomes very popular.
(3) VAT on all institutions providing pre-undergraduate qualifications. Suddenly a university foundation year is VAT added, and some schools will come up with their own qualifications which are not under any obvious umbrella.
(4) VAT on a specific list of institutions - suddenly "crammer colleges" and "full-time tutors" get very popular, whilst there are huge numbers of legal challenges as insitutions which see themselves as being on the wrong side of the boundary complain that the rule is arbitrary and unfair.

I can imagine if sports, music and creative arts clubs are exempt, then suddenly private schools will be separating out their hours so that 50% of their fees are for "academic support" with VAT on and then "school proper" finishing at lunch followed by "after school clubs, societies and pastoral care" all afternoon which is VAT free. (Some schools already do something similar so that parents can use their "tax-free" childcare vouchers on these activities).

What sounds like a simple rule might well be really quite challenging. When there is a financial incentive, you can be sure that there will be people looking for and exploiting loopholes.

Quite. I don't know why some posters think it would be impossible to tax private schools but not universities, especially given the latter receives government funding anyway.

I'm sure private schools will be looking and finding some loopholes. It doesn't mean it isn't worth charging VAT in the first place though. If anything the fact that it won't mean a sudden huge increase in fees means it might be more workable.

“I'm sure private schools will be looking and finding some loopholes. It doesn't mean it isn't worth charging VAT in the first place though. If anything the fact that it won't mean a sudden huge increase in fees means it might be more workable.”

It is not just a question of morality or workability though it is also a simple question of Maths. If administering it becomes more expensive than the cash it generates it is not worth it, regardless of ethics/legal workability. And it will be pretty sad if eg a lot of charitable music schools go bust during the process. You may not care about private music teachers delivering lessons in private schools but when fees go up, notice is promptly given to people like that. Who cannot afford to lose their income and are usually very qualified and underpaid already.
So all interest groups need to be consulted properly and wide reaching consequences considered. For example, how would state schools bring music teachers back in? How are they going to capture MML teachers leaving private schools quickly due to private schools having to cut down on offering 8 language choices to save cash. Planning has to go into this.

Chartered tax advisor specialising in VAT and education here.

the government can absolutely decide to put VAT on tuition fees. They can equally easily decide to not to. If you think it’s tricky to distinguish between a school education and a uni education you haven’t met the VAT legislation. Putting VAT on private schooling DOES NOT mean that VAT will also automatically be added to uni fees.

We then come to the question of whether a government would choose to add VAT to uni fees. Having a university educated population is widely seen to be a good thing for society. An educated workforce is an economically productive workforce. Choosing to add VAT to those who chose to go to university is a different decision to choosing to add VAT to those who opt for a private education over a state education. If people are put off private school by having to pay VAT they’ll still get a school education at a state school. If people are put off uni by having to pay VAT then you’ll have a populace which is not university educated.

VAT could be added to uni fees is the government is desperate to raise revenue, but I can see it coming after the likes of ditching the pensions triple lock, adding capital gains tax to house prices, rolling NIC into income tax and other drastic policies.

contrary to what has been said above most universities are charities.

It’s incredibly dangerous for private schools to try loopholes though. So say a school tries a loophole, it is deemed later that it doesn’t work, HMRC bill the school for every penny of VAT you were supposed to have billed parents over the past 4 years and it is up to the school to pay the HMRC bill upfront and try to recoup that from parents. I can’t see many schools willing to take that monumental risk.

@Fleeceflop - is it a simple change of wording in a VAT Notice to capture private schools only or will it require new legislation? Can specialist music and ballet schools be easily excluded? Is it easy to exclude SEN schools? (Thinking especially of those with part local authority and part private funding)

The only way to make a viable comparison between uni fees and private school fees is to create a system in which some universities charge fees and others are available to all, entirely free of charge, mirroring the 4-18 education system.

Hope that helps, OP.

That definitely won't be a Labour policy. It's not the same thing at all

You seem to be responding to a completely different comment.