VAT on school fees not applied retroactively- ultra wealthy are safe

[Kitkat189]

VAT on school fees won’t be applied retroactively to school fees paid before 29 July meaning if you paid your child’s entire education upfront, you escape the 20% increase. I know people who did this in the hopes that this would happen and now it has. TELL ME HOW THIS IS FAIR??? The ultra wealthy won’t be impacted by this at all while other families are going to have to move their children. To those of you who support VAT on school fees, please know that it won’t apply to everyone and that some of the revenues from this will be lost. If you think it won’t matter because very few will have prepaid, you should disagree with this on principle.

regardless of where you stand on the topic of VAT on school fees, I think we can agree this is fundamentally unfair.

OP can you not see how ridiculous this sounds? You’re saying it’s not fair, because people who are richer than you will pay the fees easily, whilst people like you won’t. But there are people poorer than you who can’t pay any fees at all, even before VAT. Yet you’ve clearly not felt that this was unfair, in all the years you’ve paid private school fees. Why are you suddenly so concerned about what’s fair and what isn’t?

We have chosen to pay upfront in many previous years because we receive a fee reduction for doing so. Not all people who choose to pay upfront this year are doing so in order to avoid paying tax; they’re simply continuing to do what they have always done.

Quite a few did - as many schools offered it at the end of last term.

Same here. I've always paid a year in advance and got a 5% discount for doing so, which with interest rates so low for so long made sense.

Tax law changes being applied to transactions executed retrospectively creates a very dangerous precedent. Until labour got into power it was just a possibility. So I suspect that's why they've said it's for any payments made from now that relate to 1 Jan 2025 and later. They can't just come in and change the economics of a transaction that was entered into before they came into power.

It doesn't say this at all:

"if you paid your child’s entire education upfront, you escape the 20% increase."

Point 1.9, which you've circled, says any fees from Jan 2025 WILL be subject to VAT.

YABU. VAT has always been based on "tax points", and one of the rules is that date of payment over-rides the date on which goods/services are provided. People have been paying "early" for decades when they've expected VAT increases. Not just "wealthy", but normal people too, such as people stocking up on booze and fags before a budget, or paying for a new sofa or car in advance "just in case". You can't cry "Foul" when people you don't like do it, but take advantage yourself when if benefits you (or your friends/relatives)!

People will avoid it anyway. Such as paying the school fees through thier company as an employee benefit and claiming VAT back.

I wish people would stop telling what I should think about VAT on school fees.

I genuinely don’t care that you don’t think it’s fair that some people are richer/more prepared than you.

Bit late now, you should have paid up front before the election ideally. From today anything you pay up front will be subject to VAT.

From what Dan Neidle is saying, it seems likely that a school operating its usual scheme of paying a year up front would be OK because it’s a long standing arrangement for a set of fees that are fixed and agreed.

However, schools that have come up with a new scheme where multiple years are paid in advance where the actual fees are undefined could be in trouble, because they are not true pre payment schemes.

Sounds an awful lot like the politics of envy we hear so much about..

@stillavid
“- I know locally to me where there are may privately educated children that many parents who would have been enrolling their 3 year olds aren't any more - they will simply use the outstanding state schools near them and move to areas if necessary for good secondaries.”

I genuinely think this is the crux of the misunderstanding evident in so many threads here. I’ve heard people say this as if it’s a bad thing that wealthy parents will be accessing state education. No! That’s in fact the point - the point is for all of our kids to get an outstanding state education. Private schools are socially regressive. They perpetuate class divisions and reduce the talent pool for top jobs.

you seem to think that those of us who oppose private schools are jealous of other people’s wealth. Personally speaking, no I’m not. But I do think sending your children to private school is a bad choice, for your child and for the rest of us.

I was privately educated and chose not to do that for my dc. They are privileged and yes they will inherit the money I could have spent on their education. But I believe a state comprehensive is the best education they can get, and will set them up for a life in our society, with all of the opportunities they deserve.

I am sure we all feel strongly that we want our children to have a good education. I also want your children to have a good education.

@Kitkat189 As a principle please explain to me how this is any different for anyone taking steps to avoid an upcoming tax change, just like when the stamp duty holiday was in place and people rushed to get their house conveyancing through before the rates changed, would you think the same of those people? They did the exact same you are complaining about, took legitimate steps to minimise their tax liability. Same goes for many tax year ends where accountants and lawyers have been run ragged getting corporate deals through due to big tax differences if the same deals completed 1 day later.

Why would anyone that can do so not take up an opportunity to pay less tax than they need to.

It is against well established legal principles to retroactively apply changes to laws and taxation. Labour cannot add VAT to good or services that retrospectively- total nonsense to think otherwise. Whether paying for years of schooling in advance is sensible is another debate - the school could go bust, or you move area or your kid hates it or gets expelled and you can't get any money back.

Awwww!

So sorry you have to stew in your envy quite so badly.

Maybe you can cheer yourself up with the news that the winter fuel allowance for pensioners will be striped away now.

Of course it won't.

That's like saying if they put VAT back on sanitary products and you'd decided to stock up before the date they do then you'll have to pay the government the VAT somehow.

Bonkers

Yeah … that’s not going to work.

I attached it. You would have had to pay before today though

@Kitkat189
just get a governess & private tutor instead.

Link for this doc?

Have your school confirmed they’ll pass the full 20% on rather than increase their income stream or make cuts? I’d check that before borrowing as many schools I know of aren’t coming close to passing the full 20% on and have been planning for this eventuality for a good few yesrs

Where did you get this post? I understand it’s applicable to all fees paid for the point after this date and parents have to backdate.
what is the source of the data and can it be validated?

www.gov.uk/government/publications/vat-on-private-school-fees-removing-the-charitable-rates-relief-for-private-schools

It's on all the news channels

That’s illegal as the company can only claim back VAT on goods and services it receives, not those somebody else receives.

(Otherwise rather obviously they could just go out and do that now for a whole host of things, not just private school fees).