To ask if you know what your private school is doing about vat yet?

[schoolLa]

Are you having to pay 20% extra or is it less?

we wanted ds to start in two years when he’s five but our savings had broadly just matched what we predicted inflation to be and obviously didn’t include the vat issue that’s since come up. Now not sure if he will have to go when older as we have no direct visibility as to what schools are doing with vat as not currently in the system.

Surely it would be illegal if not?

@bridgetreilly not sure what you mean. The schools can pass it on to parents or not. **

Some schools are reducing fees so as to minimise the impact to parents. Obviously they still add full VAT on top, but the common shorthand for it is “not passing in the full amount”.

and in answer to the question, ours have said they need to wait for the detail in the budget.

There is no "not" about it. Legally schools have to invoice for 20% VAT but they can look to offset against fees

Ours have reduced fees a teensy bit so it's gone from 5700 a term to 5400+vat.

total increase to us will be 13.5 for son and 5.6 for daughter. They are reducing the fees and then adding the vat to get to this figure. Daughter’s school says they’ll add a bit as the years go on. Sons school are saying it’s all in on hit.

I can’t believe the government want this implemented in January when there has been so little clarity about it. I don’t agree with vat on education but also see why Labour are doing it. But the way they are doing it isn’t great. The whole business rates thing is such an unknown as well

No, they can’t. They have to charge VAT to the customer.

But they can reduce fees to lower the vat payable. So rather than the terms fees going up by the full 20%, the gross fees will only be say 10% more than pre-VAT fee levels.

Schools are doing this by increasing class sizes, carrying out capital projects so they can reclaim vat and cutting back on scholarships and bursaries among other things.

Fees are reduced this year at my daughter's school.

At my DS’s school (he is actually leaving anyway) they’ll be lowering the fees slightly but what everyone, including the govt forget, is that once you are registered for VAT you can also claim it back. So yes, they’ll owe 20% on the fee revenue, but they can now deduct VAT on goods, services, electricity etc. my DS’s school reckons this means that parents will only see their bills with VAT going up by 7%.

They can only increase class sizes if the classrooms are physically big enough. Classroom sizes at indy schools tend to be smaller because they only need to fit in max 20-ish pupils. You can't just magically squeeze in another 4 desks.

7% seems on the low side I can’t imagine a school would have that much vat to claim on a regular basis. a schools major cost above everything else is staffing which doesn’t have vat on it. They could do a major capital project or claim back vat they’ve incurred previously on capital items still held but that’s not going to be every year,

I don't think the government forgot that VAT can be claimed back. It was mentioned in the IFS report that Labour endlessly quoted during the election (and presumably part of the estimated £1.6bn figure).

Ours is suggesting a 13% increase in January

Ours are going up by just over 10% (they are reducing fees slightly and then applying VAT). There have already been big rises every year though - when we applied for dd’s place (4 years ago), fees were about £13k (can’t remember the exact figure). They’ll be nearly £19k from January, which is going to be extremely difficult to pay - but she is in year 9 and has 3 years left and we’re going to have to manage (she is autistic and bright, and simply wouldn’t cope in our huge catchment school - she’s thriving where she is now because it’s very small and quiet and bullying is far easier to stamp down on). I’m already working 6 days a week, and our household income is about £60k after tax. Fortunately we’ve paid off the mortgage on our (small, run-down) house. We’re lucky to be able to afford it at all and I appreciate that so am not complaining at all in real life… but it’s taking huge sacrifices and it feels like it’s all for a token gesture. There are many families at dd’s school who can very easily manage the rise in fees.

We've not been formally advised but have been informally told to expect around 15%. It will be very much individual to each school. Mine are going in to Y11 and Y8 so we'll see them through to the end of GCSE's then move to state for sixth form. It's not a commitment I'd entertain if I was starting the journey now. Don't forget, by the time your DC start, state schools will have become magically brilliant according to the Labour party, so you shouldn't need to consider it.

Ours are going up by about 11pc because they're making some cutbacks and not everything is subject to VAT.

What I would say though, based on my own experience, is that if you're wondering whether it's affordable or not, then it's not worth it.

I don't know whether we're going to be able to keep our kids in private school or not. Business is going through a tricky patch, my wife is disgusted with me for not making enough money, the stress pervades everything.

Take the money you've earmarked for school fees and buy a house near the best state school in your area. Your kids will grow up in a lovely house, you won't be stressed out or arguing about paying fees, and when they leave home you'll be able to support them financially.

They use the site as an event venue (weddings etc) which they have ramped up over a few years and, yes, there’s a significant capital investment programme in place. (And it’s not 7% net VAT the school will be paying, it’s a 7% in net increase in the bills parents will pay as a result of fee reduction combined with VAT tax planning. They will likely pay 10-12% net).