VAT on private school fees

[user1486984759]

So I’m going to get crucified for this, BUT, let me get this straight:

• We pay 45% tax, thereby funding state schools
• We do not get any benefits, and those that do get priority when it comes to state school admissions
• We scrimp and save from what’s left after paying 45% tax to pay for our kids’ education
• And now the state is going to add 20% to our school fees to fund state schools
• So we pay the most to fund state schools, but when it comes to state school admissions, we are last in line

How is this fair?

It seems that in this country, the best places to be are (1) a non-dom billionaire, or (2) someone who doesn’t pay taxes, gets all the benefits, and gets priority in state school admissions. The hard working PAYE earners are screwed by parties from left, right and center.

It’s the same at my DS’ school. Loads of kids took the 11 plus last week to try to get into the local state grammars. The school is an all through independent so the majority usually move up to seniors rather than go to grammar. But there seems to be a big increase in numbers sitting the 11 plus this year when compared with previous years. From my own DS’ perspective, we had factored in a 20% rise as this policy has been hanging around since the previous election. However, what we didn’t factor in is our mortgage going up £600 per month, our energy bills doubling in price etc. Labour don’t seem to have taken into account that some parents will be impacted by the cost of living crisis and that this is only starting to filter through now that peoples fixed mortgage rates are expiring. So they refer back to previous years of school fee increases where there hasn’t been a big drop off in pupils…but those were the years of low interest rates…

And before any one leaps on me, I take no joy from that side. We pay full fees and will also be in the same position. Obviously there will be some who can afford it anyway. Our holidays are camping in the UK and we drive old cars (as do many, both state and private). It’s not always as simple as people saying someone else can pay more tax by having one less holiday.

Not a woe is me, nor looking for sympathy in cost of living times, but from our side labours policy will not raise money for the state, but will cost it by having to offer 2 additional state school spaces. once they’re in state, I will cut down working hours to be around more to support them at home. I am not sure that the IFS costed all that into their policy document. As I say, if it’s idealogical , they will have achieved that aim. If it’s finance raising , they won’t .

agreed, I don’t think labour seem to have thought that people will (and are free to) change their behaviour as a result of the policy. They seem to be saying along the lines of you must carry on the status quo - as that will raise us money. If need be cut your standard of living to do so - one holiday less, don’t renew the car etc.

some will be able and want to do that. Others of us will not. We had a long think last night - our mortgage has gone up, we prioritise our home above education which comes a close second. We are making plans to go state at a time when it suits our children. Suspect we’ll end up paying the VAT for a year or so, but we won’t be in until 18 anymore.

“VAT is prohibited on education under EU law. Now, thanks to Brexit, the government can decide to change that.”

Wow have we actually found a Brexit Bonus? Happy days!

Why do we think that bursaries will continue if they add VAT ?

Some full fee students may leave and go into the state sector.

for high achieving schools, it may be different. looking at a school like Tonbridge, they provide bursaries worth £2.8m annually (equivalent to 75 full time day-school places) and have about 800 boys in total in school, including bursaries. They also raise £130,000 for charities annually, have a number of outreach activities, numerous free lessons for state pupils, Saturday school for state pupils and they also let 10 local “partnership” state schools use their facilities.

if they removed the bursaries, stopped all outreach activities, rented out the facilities to private sports clubs instead they would be able to mitigate about half of the VAT increase.

As the school is very well regarded, they may be able to get full-fee paying students instead of the bursary ones. They would not have to raise fees at all. I suspect other schools may be similar.

it would be a loss for the bursary students, anyone attending the free lessons and the partnership school… and not sure the entire VAT would go to schools? There are a huge amount of public sector issues (NHS, housing, care homes).

Schools that are charities (non profit making) hold fundsxfor bursaries that have been specifically given for bursaries. It is illegal for that money to be spent on anything other than bursaries. Labour have admitted that those schools will stay being charities (this has been obvious for years to those who understand charity law) so bursaries will remain.

The change being proposed isn't stopping schools from being a charity, it's stopping the use of a blanket term of "education' as a charitable aim from being used as broadly.

Education is certainly a public good and a not-for-profit organisation providing education (eg say an organisation thar visits schools that don't have their own computer resources and brings in a bunch of laptops to teach the kids coding for a week) can operate as a charity and doesn't habe to charge VAT for the service under the same definition that currently also covers the fees for Eton. Charities that provide VATable services do have to charge VAT onnthe services, but that doesn't currently include education. The proposal is to change the definition to have a category of education that is a charitable "good cause" and a category that isn’t. There's a huge area of grey in between though so the exact wording will be very important.

Bursaries will remain absolutely. But if the fees go up due to VAT the same pot of money will go less far and either help less children or the same number of children but with a reduced discount.

And equally our school actively raises money for their bursary fund from current parents - I think only an element comes from bequests etc. if they are feeling the squeeze, it isn’t a given that that fund raising will remain as successful.

Or they may shift bursary money to help fund children in Y10/11 who would otherwise be unable to continue at the school.

So far fewer new bursaries and more to existing pupils.

@OhCrumbsWhereNow I can definitely see that scenario, bursaries going to existing pupils rather than new ones

Definitely.

They can also shrink the bursary pot considerably. 10% rather than 100%+ awards.

The schools will do everything they can to minimise costs to the free payers. Especially in schools where lots of parents are in salaried jobs as opposed to the inherited wealth or oligarch big name schools.

@IheartNiles yep like DDs school where the majority of households consist of both parents working in order to afford fees.

BodgerSparkins

Obscene wealth and the hoarding of assets is damaging in ways that are far reaching and often poorly understood.

What is hoarding of assets? Keeping large sums of money in the bank?

As a child my husband received a full scholarship to a very prestigious school where he was bullied for being poor by the other students and the staff and left, giving up said scholarship, after a year.

Theres just as much bullying in state schools - my stepdaughter suffered a lot for being ‘posh’ - but maybe you think picking on posh children is acceptable?

One example is people that buy up properties, hundreds of properties, and then rent them out at extortionate, marketing distorting rates.

No, of course picking on any child is cruel. I feel you're deliberately misunderstanding my comments. The point being, which you've conveniently missed off your quote, that there is variability between both sectors, and that just because you've paid for a service doesn't necessarily make it better.

This comment is absolutely sickening and shows the superiority complex of SOME private school parents

Why do you think that state school kids will be 'crushed' by these children? please elaborate.

@weasel77 More money buys more tutoring. More tutoring generally results in better outcomes e.g. test scores. Which part is sickening?

Obviously I intended to include the user you were quoting also, fail. Sorry, new to the forum.

A lot of state educated children receive tutoring prior to entrance exams. Or their parents are teachers. Or they're coming from a much larger cohort to begin with, so it tends to be the children that excel academically in any case put forward. Your point about tutoring is valid, but I'm not sure but I don't think that all of a sudden state children will find themselves universally outdone by those leaving the private system leaving because of an increase in fees. I am not arguing it's a good policy.

@BodgerSparkins More money buys more tutoring. More tutoring generally results in better outcomes e.g. test scores.

@BodgerSparkins It may not happen overnight but it will happen over time. It’s the result of shortsighted policies.

Take the UK freeze on uni tuition fees for example. Well intentioned but results in international students gaining an edge over domestic students because universities prefer students that pay higher fees… surprise surprise

There has already been a growing belief among private schools that state schools are being given preference in uni admissions because Oxbridge etc. want to be seen as more inclusive. So the option to switch to a state / grammar school around sixth form has already been widely discussed. The 20% increase in tuition fees will tip the scale for more and more parents

I work in Higher Education, Finance weirdly enough. I think tuition fees are wildly ill thought out, and entirely agree on that, but not that that's an argument for or against what we're discussing here beyond the fact of it also being short sighted.

I would again question why you think grammar school entrance would, in the future, be skewed toward those that would otherwise be in a private school? Whether in the short or long term? Given that, as I've pointed out above, state school pupils often also receive preparatory tuition, are themselves the children of teachers, and come from a far, far larger cohort to begin with so there will also be a larger pool of high scoring students.

I do think that, were this introduced, there would be unintended consequences. I just don't think this is one of them.

I don't think that's true. Whether there are people that believe it or not.

OP I think the taxman knows that you will keep working and paying 45% tax plus the 20% VAT on school fees. Because secretly the Brit hates the hard working overly ambitious type - both at the top echelon and the bottom one.
You are only good for modern day colonialism - imported for your skills and the taxes. You are their dream. They can’t wait to fleece you and send you off somewhere in retirement e.g. Singapore, so you don’t “burden” the NHS.

You should work less and send your kids to the local state school, especially in London. You really need not be scared of them, they really are not that bad, nor is the NHS. You just have to operate within the system and get used to it. That is how it is done here. And it sounds like your DC are smart enough anyway. Put your feet up a bit, it is all going to be fine.

You have to understand that both political parties do not like the ambition that has been imported. They just want your cash. Many traditional Brit has no interest in Westminster School or a Barnet grammar anymore - it is too “ambitious”. There is still so much colonialism, sexism and racism going on. This policy appears to be coming, it will have unintended consequences and cost a lot of money, but nobody is going to care. We have form for this. It need not make sense.