If Labour win... are your DCs coming out of Private Education?

[MrsJamesMathews]

Sitting here doing some maths.

It's not looking great.

With increased corporation tax and VAT on school fees, I think we'll be having some very awkward conversations with our DCs schools on Friday.

Anyone else worried?

I get the logic foxpants but I don't see how it can be true. Yes, the net result of VAT paid and VAT charged is going to be lower than 20%, but unless a school is spending the same on VAT goods as the fees it's charging, it's never going to result in a VAT refund.

the point is that this tax change will not be as lucrative as labour believes it will be.

Well, DD is currently in private provision and although she will be going into a state school in September 2018 for other reasons, the VAT increase would not have affected my choice of where to send her.

Similarly, the VAT I pay for building works etc does not affect my choice of whether to do it or not. I do look at quotes from non-VATable contracters and think about the cost as a whole, but I would still pay more to choose the best provider of the service that I want (and probably cut back elsewhere to afford it).

I'd rather pay more in tax and have better public services. I don't begrudge it. After all, as somebody in a position to pay for private education I am already a lot better off than most (even if I don't always feel it!). We all make decisions about what to prioritise in our lives and plenty of what we prioritise is VAT-able.

I do suspect that better funded state schools will be more appealing to parents who are currently sending children to 'adequate but not outstanding' private schools just to avoid the terribly under-resourcing of state schools, and that it will be a net saving for many. But for people who are interested in prioritising their children's education over other types spending, and who want the very best -- well, as you can see from the enormous increases in independent school fees over the past 20 years, I don't think there's much price sensitivity. I have chosen to be in cramped accommodation in order to send my DD to the best place for her. I wouldn't hesitate make similar/greater sacrifices again. But I'd love to see state schools as a 'best in class' option, and I don't think we can get that without funding them better again.

I don't think Labour mind if the policy costs more than it raises. The current Labour leadership is anti independent education per se, so they would implement policies that reduce their attractiveness as a matter of principle.

They probably know it won't be lucrative and they must know that even the abolition of independent schools would not iron out inequality, but there is an ideological drive that sees ensuring that every child has the same education as a route to equality. I think it is partly driven by flawed good intentions and partly driven by a desire to attracted those with a chip on their shoulder about independent schools. The ideological extension of this is to ban home schooling, which some countries have done, thus making state schooling compulsory.

For those of us with academically gifted HFASD children, who cannot cope with noisy or busy environments and who would not be catered for by special schools for children with delayed learning, the reduction of choice is a more than just a financial worry.

Yes, schools would recover VAT on their capex programmes. If a school invested in their sports or drama facilities at the right time of the year (ie. in a quarter when their fee income was low), it could technically result in a VAT refund. This would be no different to any other small business.

Way up thread somebody posted a figure of children that could be potentially affected, I can't find it now, does anyone know.
I know 7% of children receive a private education but how many is this?

Sorry, but people who insist that they are going to flounce overseas "if Trump wins/if we leave the EU/if Labour raises my private education expenses" etc. etc. are usually talking bollocks.

I have folding money that says that all the Hong Kong-wannabes on this thread will still be here five years from now, in the very unlikely event that Labour gets in.

I don't especially shed a tear for a lot of the private school users on this thread, other than the SEN families. But I think a reasonable case can be made that pushing more people out of the private school system will just further increase house prices in desirable state school areas.

Placemarking. Sorry.

Yes, I have a preferred lifestyle, but if Labour get in then my luxuries go so that we can cut the outgoings. can live with that. But hairdressers, cleaners, salon staff and nail technicians will suffer. I don't send my ironing out, but I know people who do. They will stop that service so who is going to be penalised at the end of the day? There's going to be a lot less disposable income filtering down, that's for sure.

gilly it's about 500,000 kids. Some people say that's not a lot.

Do you all wring your hands as much over the risk of interest rates rising and increasing your mortgage payments in either the short or long run? The likelihood of that happening is significantly higher than a vague manifesto pledge by Labour.

Its not just the VAT on School fees though its the increased tax burden which a large number of private School parents will have to pay which is going to hurt.

I wonder if it won't be a full 20% VAT added but a lesser tax a bit like insuance premium tax which parents will probably find without having to leave and go into the state system.

Vanilla

Thank you very much

I think even one child is too many irrespective of their parents income.
To me it isn't about saving money, but what's right for our children.
I wouldn't mind fees going up if it meant that people worse off would benefit, but if mine went to state school even on a low income I'd prefer to pay for school dinners.
Of course those unable to afford should be free, but that's the case already.

I'm currently trying to find out how schools supported by the government/ charity status will be affected, but can't find anything as they are so few, maybe not considered in the scheme of things.

Any other tax rises will affect the rest of the population as well though, they are not exclusively being placed on families with children in private schools, nor just being proposed by a labour government. The Lib Dems want to increase income tax across the board, the Conservatives put various stealth taxes in place and are being very evasive on their tax plans. Given that it is extremely unlikely that labour will be forming a government on Friday, none of these "awkward" conversations with schools will be taking place.

I'm suggesting that when people make the decision to privately educate their children they should look at the long term picture across the whole of their finances. We have had historically low interest rates for the last 10 years, so many people have forgotten the impact a 1% increase in interest rates could have on a typical mortgage. The probability of that happening is significantly higher than a VAT increase being rushed through. That could easily add £3,500 p.a. to a typically home counties mortgage. That's the equivalent of a full 20% VAT rate being passed on to families on school fees of £17,500. Personally, I would be far more concerned about that if I was doing any financial scenario planning , than worrying about a notional VAT increase.

I think we'd need to sell the house and move somewhere a bit cheaper.

I'm all for raising standards in state schools (and happy to pay more for this end) not least because that benefits the entire country long term. But I haven't yet encountered a state school that offers me what I want for my children. And the level of funding being proposed by JC doesn't come close.

And please can someone tell me why he's not advocating the abolition of faith schools at the same time. That would get my vote without hestitation.

Do you all wring your hands as much over the risk of interest rates rising and increasing your mortgage payments in either the short or long run? If by wring your hands you mean 'rationally consider' then yes of course. On that point we have taken out long fixes that we wouldn't have otherwise done so that rate rises wouldn't risk school decisions in the short term. When we took the decision to go private we looked at all of the likely risks - interest rises, redundancy, tax rises, fees rising much faster than incomes and planned accordingly. We wouldn't settle the girls into a school if we thought there was a significant risk that we would have to suddenly pull them out if things go wrong (if a lot went wrong then we would have to pull them out eventually but would have the cushion to do it in a managed way at a sensible point in their education having lined up the next stage). The 20% increase in fees wouldn't push us straight out but it would put the balance of risk uncomfortably close to being at a point where we wouldn't have taken the decision to put them in in the first place.

As to 'hand wringing'. An interest rise is not something that you can do anything about save for plan for. This VAT point is a political decision in a manifesto and so it is worth taking into account when voting. The two are very different thought processes.

people who insist that they are going to flounce overseas "if Trump wins/if we leave the EU/if Labour raises my private education expenses" etc. etc. are usually talking bollocks.

Possibly but again if you think about it as taking a rational decision rather than flouncing then you might see it differently. So for us (and I imagine for quite a lot of our friends) BREXIT comes with the potential for fairly serious disruption to our areas of work and also some pretty attractive options for moving. We've resisted that because we are in a good place where everyone in the family is happy in school/work and we think we can ride out the BREXIT risks. If we didn't have children we'd have gone already. If the VAT increase means it is likely that it's not financially sensible to keep the children where they are now for schools, and that risk is increased by a general increase in our tax burden, then it becomes much more sensible to move. Add that to the fact that there is no real clarity on what the objectives are for a BREXIT deal whoever wins on Thursday then moving looks far more attractive. So if Labour win then we will look much more actively at going, not as a flounce but because the balance of disadvantage/advantage in staying would change considerably.

Most people though will not be making their decision on Thursday based upon whether a minority will be affected by a potential VAT increase on private school fees. The policy will be largely irrelevant to a lot of people potentially affected, as they will be able to afford the fees regardless of whether they rise by 20%, 10% or 0%.

You have taken the sensible approach by taking a long hard look at your finances before committing. However, I have clients who have gambled everything on putting their children into the private sector, switching to cheap short term fixed interest only mortgages who haven't been as responsible.

For those of you concerned about your hairdressers, cleaners and ironing ladies, I really don't think that they will suffer as much as you believe, simply because a few private school mummies are tightening their belts. You just have to look at the notice boards in any newsagent, post office or supermarket to see that their services are like gold dust and they will always be in demand.

The hit to sterling/UK biz if Labour (Momentum Labour let's not forget) were to win and the implosion of the UK housing market (garden tax, mansion tax, City moving to Frankfurt tax) would mean that nobody would be going anywhere I suspect because nobody would be able to sell their house ... home schooling and goats in the back garden, anyone?....I expect goats are VAT-able mind you....

I would love to move to Italy, not sure of my chances though
I bet it's lovely there

Sure Stickerrocks most people won't be voting on the basis of that VAT increase but this thread was started to ask people who are affected what they would do (not asking whether it is a good policy generally) and it is likely to be a big issue for that group. It is potentially a decisive issue for me especially when coupled with an increase in tax for those earning over £80K and the possible land tax. Taken together that could have a huge impact on our finances. I am in a very marginal constituency and for the first time feel that the consequences of the election for our family are potentially so huge that I should vote on that basis (I have never voted on personal interest before). I am in an extremely marginal constituency so you never know, it might decide the outcome of the election

The cost of a goat is unlikely to change. One of my clients held his Jack Russell and a couple of ferrets in his company as assets and was able to recover their expenses accordingly.

www.theguardian.com/politics/ng-interactive/2017/jun/02/tactical-voting-guide-how-to-make-your-vote-count-in-the-2017-election Let this help you to decide then user.

Whoops, posted too soon. I would love to live in a marginal constituency, but all of the opposition votes combined could not budge our incumbent, so there is always a disappointing sense of inevitability when I vote. I would love the thrill of knowing that my vote (in which ever direction) could genuinely count.

lamp

Your H.ed and goat scenario sounds like a great idea, we may just decide on this ourselves.
Although, hopefully the goats will remain free from VAT