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?

You would spend that £24,000, paying VAT, giving the government £4800 in VAT, presumably, whereas currently they get nothing because it all goes to the school and is zero rated. So the cost to the government is reduced to £8000.

Or rather, the school places cost £8000 and you'd pay £4800 in VAT if you spent your £24000 on 'wonderful holidays and experiences'.

If my children come out of private education a small amount of it will be spent on private tuition from non-vat eligible tutor, but the majority will simply stay in our limited company to pay for our pensions and property investments. The Government will then miss out on corporation tax and dividend tax on £27k, plus fund our DCs education.

How can he justify a policy that leaves me £24,000 better off but the government £12,800 worse off???? Bonkers.

Plus you're the minority - most private school parents will continue to send their kids private.

"So the cost to the government for my children leaving private school is £12,800 per annum (being the loss in VAT and cost of state school place)." I'm afraid your sums don't add up .

Corporation tax is based on profits, not how much you take out of the company. Therefore the government would be no better or worse off in terms of the corporation tax you pay if you decide to leave £27k in your company.

Our pension contributions property investments are allowable expenses, therefore corporation tax not payable.

Lots of duel income families in our school where one income is for school fees and the other is to live on

If we had to move our DC to state, then frankly I would just become a SAHM - no point in me working.

So state would have to fund our kids education AND miss out on my tax.

It st he law of unintended consequences.

Not unless the gov stop paying the fees.
In which case dd will have to leave as the fees are about 10k more than our annual income.

Feel sorry for those that pay fees who will be affected by this.

sticker I don't think you understand business. Corporation tax is payable on net profits, after allowable expenses, not turnover. A ltd company is 'allowed' certain expenditure before net profits are calculated for corp tax purposes. Director/staff pension contributions, the purchasing of business assets (eg rental properties) are both allowable expenses. We could therefore easily make sure the money we don't spend on private schools doesn't get taxed. Not for now anyway.

gilly what I'm stressing about most is when to make the decision that we won't able to afford it. If/when corbyn comes in to peer so that we can start afresh in September, or wait until the moment the vat is applied and we don't have the money for the following term.

power not peer

It st he law of unintended consequences

Not sure you know what unintended consequences are....

They're when something utterly unexpected happens that completely negates the original purpose or has a much bigger negative effect on something else. A small minority of parents switching to state ed or quitting their jobs won't make a significant difference at all.

Some people choose to smoke, some people choose expensive gym memberships & others choose to give their children the best start. There are thousands of parents who can just afford private education. Comrade Corbyn really doesn't get it.

MrsJames

I'm worried that some of my dd friends won't be able to continue at their school If they stop the scheme to fund the low income families then dd will be out and the school will either close or places be taken by the very rich, making an inclusive school into an elite one.

My thoughts are with anyone experiencing this and contrary to many people's belief it isn't just a case of it affecting rich people, it's the mc and in some cases low income wc.

I do support labour though, as I agree with most of their ideas.
It would be hypocritical of me to pretend otherwise.

We too would be affected by this, we only have one child and he's in private school. We just about afford the fees, we couldn't afford it if JC's plan goes ahead. I dont think its a great plan even though I am a Labour supporter (and will be voting Labour), as i foresee it putting a lot more stress on the state system. Lots and lots of people we know only just afford the school fees, its not like we are the only ones!

So what will we do with ds? I suspect we will consider various options including moving house / relocating / cheaper private school (not sure that one is a realistic proposal).

If my children come out of private education a small amount of it will be spent on private tuition from non-vat eligible tutor, but the majority will simply stay in our limited company to pay for our pensions and property investments.

If you're so concerned about being unable to pay rhe school fees then sell one of the company's property investments.

There will be people genuinely struggling as a result of this tax, but you're clearly not one of them!

There aren't any yet!!! There will be / could be if we don't pay school fees. Or, it just goes in to the pension pot. Or stays in the ltd co forever paying us directors dividends in to our old age long after we stop actually working.

That is wrong. EU rules mean that once we have started charging VAT on something we can't stop but there is nothing in EU rules to prevent us charging VAT on school fees whenever we want.

Yes there is. Education is exempt across the whole EU. You are not allowed to put VAT on exempt items.

This is not the same as the rules for increasing the rates on items which fall within the ambit of VAT but are currently zero rated or on a rate lower than standard.

UK cannot change VAT definitions without the consent of all EU members. It's a fight we really don't need to have during Brexit. Also, as it'll take a while to replace VAT with our own successor consumption tax, it would make sense to roll all changes with that (need not be exactly in step, but needs to be planned together enough to ensure that the end version is workable).

There aren't any yet!!! There will be / could be if we don't pay school fees. Or, it just goes in to the pension pot. Or stays in the ltd co forever paying us directors dividends in to our old age long after we stop actually working.

In which case your whole family will benefit from attending properly funded state schools. Sounds like a win win!

scaevola so would you advise sticking with the status quo until such time as vat is absolutely definitely imminent? And JC coming out on Friday declaring all sorts isn't absolutely definitely imminent?

properly funded state schools that's pie in the sky IMO. And I suspect my idea of properly funded and JCs are vastly different. 30 pupil classes and once weekly PE? That's not properly funded IMHO.

Lots of parents that I've spoken to say that they might be more picky about which stage of education they will pay for - depending on the state schools available to them. For example, they might use state up to age 7 or from 11-16 instead of private all the way through. Most said that they will stay pay for sixth form though - have Labour mentioned anything about extra funding for sixth form or even secondary schools in general? Scrapping university tuition fees will mean a cap on 'free' university places of course - 1 in 5 Scottish university applicants received no offers from Scottish universities in 2015.

still pay for sixth form