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?

Oh that would be immensely funny! Might stop a few of the posters on here rubbing their hands with glee about how the successful and ultra rich of the world need to pay more tax! Except they’re not ultra rich a lot of them are just hard-working regular people but hey Ho, let’s hit and where it hurts because you don’t really care do you. Well you will if you end up having to pay 20% extra on yer Clubs and stuff won’t you?

What about: swimming lessons offered within the private school day and included in fees? Perhaps it depends on whether run by school teachers in a school pool, or outsourced to an external swim school?

There is a lot included in private school fees that is above and beyond the national curriculum and crucially, these are activities and benefits that many state school parents choose to source and fund privately too.

I can envisage our school fees bill being broken down into these categories, with some incurring VAT and some aspects not, because otherwise it will open a huge can of worms. Obviously this will reduce the tax that is payable.

At our school kids can have 1:1 CBT or psychotherapy, included in the fees, for instance. Does the time for this 'count' or, as it is not 'education' will it need to be billed separately and exempt from VAT. If it is liable for VAT, there are implications for these private services more widely.

There are so many examples like this. It is such a shockingly poorly thought through policy, and from my experience of talking to Labour politicians who are in favour of it, they are completely unaware of these implications. All they care about is the policy and the political meaning of it, not the people involved. Which gives me zero confidence that they have any capacity think and plan, beyond their own political agenda.

Doesn’t sound that confusing does it if one of them is in the private sector and one of them isn’t? Besides which the VAT exemption that is proposed to be changed is the provision of education services by eligible bodies. The provision of room and board by a state school isn’t the provision of education services.

How will it work on sen schools? I read that Labor won't exclude sen schools as some schools will then call themselves that to avoid vat. My son attends a non maintained school which is paid for by the LA because of his needs. Will the LA then be having to pay an extra 20% on top?

Might not be complicated but morally it is discrimination because parents paying for 1 service aren't being charged whereas other parebts paying for the same service will be charged. That's why it will all end up in the cpurts

And what about the time our sixth form spend weekly running reading groups and maths clinic in local primary schools, and joint drama and music productions and sports events every year? These are so valuable for everyone involved but I would certainly be very disappointed to be paying VAT on this time, even though it falls within the school day we are paying for. But if it were removed, everybody would lose out.

• Paying for a state boarding place is room and board isn’t it so it’s not provision of education services so no change.
• same service at private school is wrapped up with a larger service of of standard rated education supplies besides which Labour have said the new VAT rules will apply to private boarding fees.
• Provision of after school clubs in private sector - fact dependent as to who is providing them: a third party (may be zero rated or exempt) or the school itself in which case they would likely take the VAT character of the larger standard rated transaction.
• Its different because there’s no larger standard rated service in the state sector which is likely to standard rate all ancillary services.

It doesn’t seem that hard to me wouldn't you just amend the definition of eligible body in Group 6 of Sch 9?

They could amend the definition of eligible body, but it’s still not that straightforward. What about partial exemption rules for example? How tightly worded will the definition of taxable service be? The disaggregation and partial
exemption rules are not always clear cut. If it was that easy to cover all scenarios within the VAT legislation, there wouldn’t be lawyers enjoying extremely lucrative and successful careers by challenging the legislation.

You (and I) might think it’s unfair and batshit but people voted for Brexit because (among other things) they were told red tape is bad. So now we don’t have it and it turns out red tape actually protects all sorts of people.

Tax legislation goes to tribunal and court every day and I’m sure there will be fringe cases that are litigated. In particular, I expect the advance fee paying schemes a lot of schools are implementing will be litigated and I think that will feel very unfair to parents who thought they were/are doing nothing wrong.

However it’s perfectly possible to treat the provision of equivalent services differently in different settings eg the provision of food is a classic example where food served to patients in hospitals and care homes has a different VAT character to in a restaurant. Also it’s perfectly possible to “discriminate” against parents who send their children to private school as they are not a protected class.

These arguments are really starting to sound like clutching at straws.

Would it be a significant loss to the state sector if it lost the scraps thrown to it from the private school sector? You would rather the activity was cut than pay an extra 20% on the time you already pay for. That’s not very community spirited is it?

Of course the principle is great - volunteering experience and civic spirit for those delivering sessions and knowledge and fun for the younger state school participants. Private school are not the only places that do this though, lots of Uni schemes are set up to do similar outreach in local communities. Plus in state schools some of the sixth form students help younger years put on productions too!

I think it would be sensible to assume that private schools can’t disaggregate the various services they supply and hope that they get a different (better) tax result.

However, no doubt some will try and will likely be challenged on it based on established case law. You’re right of course - no doubt there’s someone out there right now designing tax schemes (just like they have for care homes) that don’t stand up to scrutiny. We wait to see what HMRC’s desire is to challenge.

Taxing education is the complete opposite of community spirited. And unfortunately what happens is that when politicised poison like this is injected into society, rather than generosity and goodwill, politicised poison comes back.

It's another Brexit bus. A political agenda. A different group of people hated the EU from the group that hate private education. But both are politicised agendas that result in a society that is culturally poorer and more divided. That is what leaves me feeling very sad.

The main supply, education, is provided by the state. It's not 'a service provided for a consideration' so it isn't VAatable. The boarding would follow the supply. For private boarding, the main supply is private education, which would be subject to VAT. The boarding could follow the main supply.

If the LA pays it won't matter. They pay the VAT and then they claim it back (like all VAT registered organisations). All the accounting is done without VAT. It will probably be beneficial for those private SEN schools for kids with EHCPs because the fee increase won't affect LAs, and they'll be able to claim back the VAT they pay on things.

I’m not entirely sure what the OPs motive is in starting this thread. Less than a minute on google brings up the following on the Labour Party website:

Closing private education tax loopholes to improve schools. What this means: Private schools currently benefit from an unfair tax break that means they avoid paying VAT on fees. Through closing this loophole, Labour will raise vital money needed to improve standards in stretched state schools with more teachers.

The focus and motive of the policy is obvious. Yet OP’s still managed to cause 8 pages of whataboutery and panic about after school clubs and music lessons. When actually the policy is clearly focused on improving state schools through using the money gained by the VAT changes made to private schools.

Deliberate misinformation from the OP with the intention to whip up concern among state school parents.

It's desperate and dishonest scaremongering.

A bit like Rishi's lie about the £2000 tax. Pathetic, really.

@Kneidlach Labour has said they will provide 6500 more teachers from the funding raised. However, some calculations show this policy might cost rather than provide income so how will it pay for these additional teachers. Also it is ignoring the fact that not enough people are currently being recruited into teacher training. Most subject targets are being missed. So where are these suddenly keen to be teacher 6500 people coming from?
40,000 teachers left the profession the other year (not including those who retired). 6500 is drop in the ocean of the problem schools are facing

There are several issues with the Labour Party’s wording, some of which is factually incorrect. That is why people are sceptical about their ability to introduce the policy without inadvertently catching other things. They’ve already had to drop two policies on private schools because they weren’t workable.

private education tax loopholes

It’s not a loophole. The exemption is entrenched in the VAT legislation. Education is exempt. It’s not an accidental “loophole”. It’s illegal to tax education in the EU because most sensible countries view a decent education as positive to society.

Private schools currently benefit from an unfair tax break that means they avoid paying VAT on fees.

Their proposed policy concerns output VAT. It’s parents who will have to pay the VAT, not the schools themselves. Private schools already pay input VAT on their purchase. If the Labour Party don’t even appreciate the very basic difference between input and output VAT it’s concerning that they clearly don’t appreciate the deeper complexities.

The whole policy is laughable. I can only assume that these extra staff members are coming from some magic teacher tree. People are hardly queuing up to fill the existing state school vacancies, so goodness knows where they think the extra ones are coming from.

Yes, their whole concept of a 'loophole' is concerning. The actual intention of the VAT exemption on education is to exempt anybody supplying education from VAT. This was backed up by EU legislation (when we were in the EU) and is a basic principle in most countries. Some countries even subsidise the private sector because it works out more affordable in the long run to have a proportion of the population educated (mainly) at their parents expense. Describing it as a 'loophole' is entirely dishonest.

@crumblingschools i agree teacher recruitment is an issue. But surely a policy that aims to improve state schools through increased funding is part of the solution. We’re constantly being told that teachers are leaving the state sector in despair at underfunding, and so putting more money into these schools seems like an obvious thing to do. And something that can only help with teacher recruitment and retention.

On a related note - if some of the threads on here are to be believed, some private schools will be forced to close due to falling pupil numbers. All the threads on this focus on the burden of private school kids moving to state schools, but weirdly none that I’ve seen have mentioned the influx of teachers from private to state that would accompany this.

Because many private school teachers left the state sector and wouldn't go back. Some might but many wouldn't due to the current issues in the state sector.

but isn't the obvious point that they've said it's for 'education'?

I guess the decision will need to be made as to what 'education' means.

It will be down to wording.

And actually some private schools have already been debating this based on a couple of conversations I've heard. It would appear, under some wordings, it wouldn't necessarily constitute a 20% rise on all fees, but only in the vat eligible aspects of the school. Rather it would be a 20% increase on the percentage of fees classed as education, which wouldn't be 100% in some cases.

So if things like dance schools, swim schools, after school clubs (not wraparound childcare But activity/sport based) are not included this could mean that the vat would not be applied to that element of the school fees, especially if outside agencies are used within the schools to teach these.

Likewise if the wording goes a different way it could mean the education includes much more than academics. So privately owned companies, such as swim and dance schools, may be classed as teaching, and therefore education.

If its wording only included fee-based education - what about private companies offering tuition in academic subjects?

This isn't about charitable status, it's about what would be vat eligible or not.

There is no political will to start charging VAT on swimming lessons etc, so the legislation will be worded to exclude such things. And yes, private schools will probably be able to disaggregate some of those costs from the VATable fees and charge them as optional extras instead.

And who could blame them. We sent our son to an independent school from the age of 11. One big factor was that we could be confident that every subject was being taught by graduates in that subject. That was what my husband and I experienced at our direct grant schools decades earlier and it was hugely beneficial to be taught by experts in the subject. It must be absolutely soul-destroying for both teacher and the most able pupils for a member of staff with (say) a degree in English and a long-forgotten Maths GCSE to be pressed into service to teach Maths, because there isn't a Maths graduate available to do it.