Confused about VAT and wraparound care

[billyjo]

My DD goes to wraparound care 3 days a week. She's at a state primary but the wraparound care (for all the local primaries) and holiday club is provided through the local prep school.

She does things like football and crafts there.

I'm confused as to whether I'll now be charged VAT of these costs

@Marchitectmummy yes, I think the children from the school attend too

Just to mention so you can think about it, our school has a similar set up and has already said that it will consider increasing the fees of clubs/extra curriculars provided to external children in order to offset the VAT increase for their own pupils.

Private schools have been told to ‘cut their cloth’ in the same way as state schools. So I’d imagine they will be looking very closely at a) whether they want to continue providing this service and b) if they do, increasing the fees to cover offsetting VAT for fee paying parents. It’s been rushed in far too quickly so schools may have some knee jerk reactions as opposed to having time to properly plan.

Their aim is to make a profit 😂Good luck with that! 😁

Well other than asset stripping I can't see any other reason that private schools are being taken over by vulture capitalists.

It’s hardly rushed. Labour have been trailing it for ages and it was pretty obvious they were going to win - and in any case it should have been planned for.

Close in your guess of asset stripping, its development opportunities that are bringing them in. Lots of private schools are land owners, whether that be land they use or land they don't. I know of a couple of large developers who are circling.

I don’t think that’s right. In my experience lunch/meals are charged separately.

@cardibach I'm not sure I could have planned for this - my child goes to state school, the wraparound care position based on the below isn't clear to lots of people and this is the only only after school care available at my primary and others in my area have access too.

I feel like I'm going to be caught in the cross fire really here.

I wasn’t referring to yoUr planning, but the school’s. Look at the post I replied to.

You won't be. It's a holiday club. Childcare with activities. Not education or training.

Or is this another angle on the numerous posts about the same topic?

@cardibach the concept has been widely anticipated, but the detail only released yesterday, with an implementation in 5 months. I’m sure schools have run a number of scenario analysis, but with such a quick implementation, they’ll go with their ‘shit hits the fan’ plan. Which will mean closing ranks and prioritising their own first - as opposed to continuing to provide after school care for the local state schools. And who can blame them really.

It depends whether they're making a profit or a loss on the afterschool club. If they're making a loss, they'll have to halve their staff and limit it to their own fee paying families. This is more likely than the OP having to pay VAT.

But did you vote for Labour?

@Sacmagique75 nope lib dem

Never seen it charged separately so some must do and others not so.

I run the finance team for a private school.

I haven’t got across all the technical guidance yet and I’m waiting for The ISBA and Farrer’s to give their briefings so can’t comment on the VAT yet but it’s very common to charge fully inclusive fees and not to include additional charges for trips and lunches - gives us more flexibility and is easier administratively.

It's hardly been a secret that it was coming.
Obviously the nuts and bolts haven't been revealed yet but a school 'rushing to respond' isn't run very well!

@mouseyowl

Quite - no rushing here. Several scenarios modelled and we knew it was coming for over a year.

Just ask the provider what your next bill will be for Jan 2025. Surely that’s simple?

Sorry OP, but many people live in areas with private companies running wraparound care and clubs. It is what it is.

They have said that childcare won't be taxed but boarding is (which surely includes childcare). Meals won't be taxed (unclear if meals in a boarding house would be). Educational activities run by a private school or closely related provider outside the school day will be taxed so presumably swimming lessons run by the school will be. Unclear if a private company renting time in a private school's pool would be - may depend on their turnover.
I imagine schools will be pretty desperate to raise revenue anyway they can which would include raising charges to rent out their facilities.

I imagine OP Will be told in September to give a term’s notice of any changes. I imagine a lot of school accountants (whether internal or external) are hunkering down now the detail is known and weighing up the implications eg is the footbalL once a week VATable and, if so, should that be split out and charged separately or whatever.

Although schools will have run scenarios, now we are into the detail of planning for the actual words of the rules.

Surely in which case the hours for PE lessons while at private school should also be exempt.

The whole thing is just a mess, which will be full of loop holes and therefore probably raise less than it costs to bring in.

They either need to blanket apply it or just not bother,

One of the reasons for everything being included is to prevent evasion/avoidance schemes.

if you don’t include wrap around card provided by the school then the school fees can be reduced and the wrap around fees increased. This removes the vat problem.

So instead of £20k fees (plus £4k vat) plus £3k attributed to wrap around, meals, holiday clubs etc you structure it as £10k fees (plus £2k vat) plus £13k on compulsory extras. Saves £2k vat. Obviously these figures are extreme but it demonstrates why there are unlikely to be lots of exclusions.

You're best of asking the school if their wraparound care is "educational" or not. Then you'll know