How do people afford private school?

[PopGoesTheWeaselYetAgain]

Following on from discussion House of Commons today, how do people afford private school fees? Is it by sacrificing holidays and other luxuries? That wouldn't by you a year, but did she perhaps mean a term? How do you pay for the other two terms?

I'd appreciate it if posters refrained from speculation. I'm interested in people's actual financial circumstances and decisions.

Nothing has been costed out, it is just more bullshit and the common person is not going to benefit from any of this. The rich will be paid more so they can continue to pay school fees and the kids of the poor will be even more crammed in crappy schools with no hope of learning to swim.

There isn't a private school section on MN!! There are just general education sections that are for the use of anyone.

Giving up charitable status is actually really complex. Most charitable schools are already incorporated anyway and 60% are now registered for VAT voluntarily . Neither preclude remaining a charity

Oh, I see what you mean. I think the issue is that people have budgeted for a 5% increase based on the current feed. If there's a sudden 20% rise, then 5% each year on top - they haven't budgeted for that.

#fees

@cyclamenqueen - but why would private schools want to keep charitable status?
Once they have an excuse not to, because they have to account for VAT so have to boost finance departments, mitigate the VAT and start being run like scrupulous businesses?
You can see it at the moment - all these head teachers (typically ex teachers themselves) of private schools not standing up to the proposed changes properly. Do you really think the bankers/hedge fund managers/lawyers who are parents at these schools are not going to start pushing back? They will start pushing the private schools to man up.
Why would anyone want to pay 45% tax plus huge fees plus have the pool they are paying for farmed out for free? The teacher and head may want to help, I doubt the parent group will continue to want to do that?

The writing is on the wall. This policy change will lead to Cognita Group type schools across the UK and international private investment/private equity deals. Private education is a huge business. There is also huge land value at stake here.

The public benefit rules for charitable status introduced in 2006 are too expensive to run anyway and any school that can will jump at the excuse to move away from it. Eton won’t be able to due to its symbolic status, but it has a huge endowment anyway.

This policy is as bad as Brexit, sheer hate and incredibly badly thought through.

Some people are very rich.

Mine go to a catholic prep, there are plenty here who have 3 or 4 children. One mum
has 5 under 10! Mostly parents are middle class working parents. Quite a number are teachers in the private sector, others are vets and doctors with private practices or small business owners like me.

I’m a single parent, we don’t get any bursaries. School fees come out of income, it works out to be just under £900 pm for one, which is no more than the cost of nursery fees.

Many children have no option but to go private due to inadequate SEN provision in state. I know we would not be able to absorb a 25% increase in school fees. Here’s hoping that it’s a gradual year on year increase if or when it happens.

There are lots of reasons to keep charitable status . Vat is irrelevant as has it has nothing to do with charitable status. In fact some schools may benefit from being able to charge VAT because those with big capital project funds will be able to reclaim . Many schools have permanent endowments , these cannot be held in incorporated bodies the main tax benefit of charitable status comes from corporation tax exemptions and business rates not VAT Some independent schools are part of larger charitable foundations such as Haberdashers , Harpur Trust, Seckford, Fishmongers etc which need their charitable status for their other purposes.

this article is quite helpful in explaining why it is difficult to voluntarily relinquish charitable status
https://www.thirdsector.co.uk/end-charity-status/article/1284098#:~:text=%22In%20practice%2C%20a%20charity%20is,in%20question%22%2C%20Alexander%20says.

"We went without holidays, ran cars into the ground, budgeted accordingly, stopped buying the nicer things in life, essentially went to a minimalist lifestyle, focussing on experiences not stuff."

Many people do this to exist-rather than to pay school fees.

That’s true but this thread is about how people who do pay manage it on their income . It goes without saying that they already have a reasonable income .

@cyclamenqueen - my point is we are going to witness quite a few private schools becoming insolvent off the back of this policy. They will then be bought up cheaply by vulture funds for their real estate value. It is this kind of thing I am worried about.

Anyone prepaying school fees needs to make sure the moneys go into segregated and protected accounts. Most schools do not do that.

https://www.mw-w.com/private-school-owed-500000-when-it-folded-just-before-start-of-new-term

@CurlewKate · Today 11:30
Some people are very rich.

Yes they are - and government need to tax actual wealth. With a shrinking working age population, they cannot keep taxing income more and more to the point that it puts people off working. Nor should they be taxing education, because that is the next generation and if they are well educated, well that will help. They need to tax actual wealth and housing wealth, but the lot of them are too cowardly to do that.

From earned income here. Decent salary x 2, and we don't have the flash holidays/cars of some of their peers.

If you spend your money on foreign holidays there is no VAT?!

https://www.wildercoe.co.uk/complying-with-toms-and-travel-industry-vat/

“The Tour Operators Margin Scheme (VAT Notice 709/5) has been updated and requires the payment of VAT only on UK holidays and other UK travel, compared to the whole EU at present, but otherwise mirrors the existing arrangements in all respects. The margin on all forms of travel enjoyed outside the UK is zero-rated. The UK VAT treatment of travel services falling outside TOMS is also unchanged.”

Quite absurd really. UK government prefers us to spend money on foreign economies than educating the future tax payer… (well potentially incoming government). The more I read about this policy, the more absurd it becomes.

We just pay for it out of salaries. DH pays for bills, I pay for school then whatever left for holidays etc. I wouldn't really say we go without but would obviously be better off without school fees.

Pay out of salaries. Both work time (plus 1 part time additional income which helps) and stuck to two kids. 300k ish joint income but huge mortgage and really feel the fees. Often stress about money which seems absurd on what should be a comfortable amount on paper. Two in prep school. Some struggle but most afford by finance incomes (500k plus I would guess) or family wealth or own businesses. We are on « poorer end ». Policy is mad though as it might tip us into grammar /state and I would just stop work or reduce hours to focus on kids’ education. Very short sighted as am sure lots of mums like me work to pay fees. That’s a lot of lost taxed income.

Private schools that are charities are typically so because they were left an endowment that must be used to further charitable ends. It’s not a choice but rather a requirement in their statutes.

Not everyone is struggling to afford the fees but it’s fair to say to to have two in private school in London you will be making some lifestyle compromises or are relying on external support / inheritance on anything less than a household income of £300k.

The majority of private school parents won’t be earning above this threshold statistically so that combined with interest rises and other cost pressures do mean a material number of people will leave the sector. The bigger impact though will be on future enrolment. Those who were contemplating it will forgo it or delay it which will cause pupil numbers in private schools to decline substantially in future, particularly for prep schools in my opinion.

In all likelihood, some of each. Will VAT be payable on bursary tuition? If so, schools won't be able to offer bursaries to as many children. Those who are currently on bursaries, either full or partial, are the ones who are most likely to simply not have the ability to meet any increases on their own. There will be others for whom the tradeoffs ("sacrifices") to pay for private education become so onerous that they're no longer worth it. There will be many who will make a few more tradeoffs because they're still palatable. And there will be some for whom it makes no difference at all. We won't really know how many fall into each category until it happens.

I'm a single mum with one child in private school. I afford it by working and earning a decent salary. 🤷‍♀️ I wouldn't be able to afford it for two children though.

Prep schools will be hit the most. Parents will keep kids in the State as long as possible.

A friend of mine sees it exactly like that.
sent his kid to the nursery of a large local private school and he’s still there aged 15 (only child).
A friend of mine said the same. They didn't end up choosing private, but the fees were comparable with what they were paying for day nurseries before school age.

Fees quoted on here are often substantially higher than what my friend was looking at. It was a few years ago now but the ones they looked at would have been £10-15k a year.

It opened my eyes to the fact that my assumption that everyone paying private fees being loaded was foolishness and ignorance on my part.

I think you're right. If private becomes unaffordable a lot more parents (whoever is on the lowest income, but mainly it's going to be women, right?) will give up work or cut back hours 'to focus on children's education'. Why work you butt off if the other partner is already on a high salary?

DH goes to work each day to provide enough to cover fees for the one we have left at private school. Eldest 2 have now left. Other than boarding during 6th form we do see them each evening and during the school holidays.

Why do people seem to think everyone has been left property, a business or a huge inheritance? Out of the one we have left at school only one set of grandparents pay the school fees in their form. The other children have parents who are medics (dentists, anaesthesiologists, radiographers, consultants etc), farmers, work in financial services or have started their own companies and been v successful.