More than private school fees will be affected by VAT

[MyNameIsFine]

Don't actually know if I'm being unreasonable here, interested to know whether this is true or not. Will the VAT on education also affect holiday clubs and afterschool clubs?

They are already affected if there is VAT on cake, or sweets, or some soft drinks.

At the moment private, but what's that got to do with anything? I still use the same holiday club as everyone else, which is at a different school. When they were in state primary, I used the wrap around care, like everyone else.

Private tuition
The latest decision that has given us consistency is the upper tribunal’s verdict in the case of Anna Cook [2021] BVC503 and the issue of whether Ceroc dancing classes qualified for VAT exemption as private tuition (VATA 1994, Sch 9, Group 6, Item 2).

The UT ruled in favour of HMRC, confirming that it was not a subject that was “ordinarily taught in a school or university.” This overruled an earlier decision of the FTT that the fees were exempt (see Taxpayer dances to surprise VAT victory).

No.

The policy is for private school.

Where does your child go to school? Private, state or home?

The fact they go to Twinkletoes Dance School/Academy/Class/Institute/Whatever on Staurday morning is completely irrelevant.

Unfortunately no one knows the answer, including the Labour Party. No one knows how the proposed changes will be implemented.

First, a few years ago, the Labour Party voted to abolish private schools altogether. They realised that was pretty much impossible so scrapped that idea.

The next idea was to scrap charitable status of private schools. It took them a few years to work out that half of private schools aren’t charities anyway, and changing charitable status would have no impact on that anyway. So they scrapped that policy.

The latest idea is to add VAT onto fees. This is a relatively recent plan (in the last few months) so hasn’t been fully thought through (just like the previous proposals).

The problem with that is that the current VAT exemption is entrenched in quite complicated legislation. Changing that without having unintended consequences will be extremely difficult. For example, at the moment, university tuition fees are exempt from VAT by exactly the same part of the legislation as private schools are.

It will be difficult to say that after school clubs and wrap around care provided by private schools will be subject to VAT without inadvertently catching state provision within the new rules.

The proposals are estimated to raise a tiny amount of money, if any. Changing the VAT legislation and risking catching other areas inadvertently seems like a ridiculous idea.

I would assume people would be fine with tutoring and extracurricular classes etc coming under the same VAT umbrella, based on the principle everywhere that “if you can afford tutoring and classes, you can afford 20% more”. That’s what’s being said about private school fees 🤷🏻‍♀️ feels fair for it to be across the board.

https://www.gov.uk/government/publications/revenue-and-customs-brief-18-2020-vat-liability-of-school-holiday-clubs-first-tier-tribunal-decision/revenue-and-customs-brief-18-2020-vat-liability-of-school-holiday-clubs-first-tier-tribunal-decision

I'd rather that small red box of money be spent on state schools than giving private schools a 20% tax cut.

But surely you understand that 'holiday club' is not the same thing as 'school'?

The clue being the words 'holiday club'!

The VAT increase applies to private school fees as you well know

I've wondered about this.

My DSs are at private primary school. If I have to pay VAT, I'll pay VAT.

But only 60%-70% of the 10 hours they spend in school is technically education. The rest is (inclusive) wrap-around and extra-curricular. Our school doesn't currently charge separately, but it could and indeed then how can one easily distunguish in tax terms between a private school offering wrap around to its own pupils and a private nursery provider running the wrap around at a local state infant school (as happens in our town). Some of the extra curricular activities are also open to pupils from outside the school - will we have to pay VAT while non-pupils don't?

Like I said, another poster on a different thread INSISTED that the VAT would apply to ALL holiday clubs and aftercare. I asked 'are you sure?', because surely people would be talking about that? They posted on this thread to say 'google it', but then disappeared. So if I'm unclear, then, yes, I'm unclear - hence, the thread.

It hasn’t been made up unfortunately. The VAT law is so complicated that no one can be sure that there won’t be unintended consequences by attempting to only catch private schools.

Well, yes, I thought I knew this ... until today ... now I'm just confused.

risking catching other areas inadvertently seems like a ridiculous idea and also will not be allowed to happen.

Let's try to be sensible about this - policies that are electoral suicide don't survive.

So based on a few minutes googling, I've discovered that a lot of activity based clubs already pay vat.

After-school clubs, as long as not provided by a private service, will remain vat exempt.

That's information from the guardian and the .gov website.

Once labours manifesto is released I'll read up more on it.

The vast majority of services that parents use will remain unaffected by this proposal.

Who is giving a 20% cut to private schools?

They are VAT exempt because when we were in EU it was illegal to tax education. Because it is education and most countries feel it is immoral to tax education.

Every pupil in private school saves the state 7K per year. That amounts to £44 billion per year.
So private schools save the state money and private parents save the state money but are now being targeted by a smoke and mirror policy aimed at distracting from the fact that Labour won't commit to real increases in funding to improve state schools.

Today they have already announced that they are exempting state boarding schools (where parents pay 10-20K per year for the boarding fees). That's £1.2million less VAT that will be raised.

I don't understand why you are 'confused', it is simple.

20% will be added to private school fees. Not holiday club on another premises. Obviously.

They are scrabbling around already on things they haven’t thought about. How will they exempt state boarding schools but tax other boarding provision? This is the problem. They are likely to end up catching things they don’t want to.

Well, I was kind of hoping the original pp would explain this, rather than just write 'google it' and then disappear.

If anything after school clubs linked to state schools might be better funded as the plan is for the money raised from the abolition of the pre-existing tax advantage for independent schools to go into the state sector.

They'll have to fund educating the children who can no longer attend private schools first.

I disagree with the principal of VAT on education as once there has been an exemption for private school fees , it could extend further onto other kinds of education (university etc..). I think that there must be another way to get the wealthiest in society to contribute more.

Think it’s also worth considering, no business with a turnover of under £85k (think it may have increased to £90k?) has to register for VAT. So would imagine some smaller clubs would not change much even if this were the case.

I can’t remember the exact figures as it was years ago but when we registered for VAT my worry was that we would in effect have to charge 20% and it would make our business too expensive. In reality as we offset some vat it was more like a 10% increase.

It has been explained. You wrote I still use the same holiday club as everyone else, which is at a different school

The proposal is 20% VAT on private school fees, so why have you started posting made up things worrying about something else entirely?

Yep because, as many of us pointed out at the start, they just haven't put any thought into it. It is merely a class war opportunity for Rayner etc that has been adopted as poiby with no understanding or thought.

A lot of afterschool clubs at private schools are provided by external companies. Many have external sports coaches in too.

I don’t see how school A afterschool childcare provided by an external provider can be treated differently from school B using afterschool childcare using the same external provider. Can there really be legislation drafted that includes the private school in this instance, but not a nursery, or wrap around care for an infant school as mentioned above? The inevitable consequence will be private schools splitting out their bills to academic and other.