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.

so why should privileged parents get to buy a better education for their children VAT free with some sort of “charity” status.

You’ll have to ask Keir Starmer - despite being a lawyer he’s just discovered that it’s too complicated to remove charitable status from public schools, despite promising a couple of years ago to do just that.

All private businesses that charge VAT and pay corporation tax also engage in charitable giving and community support.

He did not say it was too complicated just that it would take years. Which is true. Doesn’t mean we shouldn’t go down that path. Worse things that we have done also took years- Brexit. And the best things we have done have taken the best part of a century- green energy

True.
I hadn’t considered that.
Our schools buildings are all owned by the school since about the 13/1400s.
So the assets are the schools before they became a charity.

The point of this post was to explain how they retain charitable status as the previous poster thought it was because they are schools alone.
Im fully aware lots of organisations give to charities and do good deeds without charitable status but it’s irrelevant to my post.

Great point @TrailingLoellia
I'm just thinking of the businesses I know (run by friends or family and ranging in size from tiny to multi million turnover) and they all engage in numerous charitable activities. And pay full whack in taxes at the same time.

I thought it was interesting that KS was falling over himself to say that he definitely didn't want to get rid of private schools, even in an ideal world, and that there are lots of excellent private schools out there. Clearly trying desperately to hold onto a bit of the right wing vote. The interviewer obviously thought that was pretty lame. There was a real sense from KS of 'please god don't ask me about any of the principles underlying this policy, just let me talk about tax'.

@Munchingaway True. I hadn’t considered that.
Our schools buildings are all owned by the school since about the 13/1400s.
So the assets are the schools before they became a charity.

Their assets are likely to still be covered by charity law. Say a school was founded in 1300 by the philanthropic gift of a king or queen to provide an education to 20 poor scholars, and with a charter allowing them to take on additional paying scholars from among those members of the yeomanry who weren't poor enough to qualify as "poor scholars" but couldn't afford the live-in private tutors that would be the education for a proper son of the nobility. Fast forward 700 years and the school is still providing 20 fully funded scholarships (and more) out of endowment funds that have grown steadily through the years, certainly the number of paying-full-whack pupils has increased somewhat, and culture has evolved to the point that the nobility are willing to send their offspring there, but they are still operating under the terms of their original charter as amended by any later legislation. Their founding may pre-date the Charities Act but they didn't "become a charity" when they came under the aegis of the Charities Commission, they have always been Charities providing education as a philanthropic good since long before the State decided not very long ago that actually all children deserve an education rather than just those lucky enough to get scholarships.

Not all private schools were founded charitably, but Labour have finally acknowledged that it's really not feasible to untangle all that history to say that those which are can't be so any more.

Seems odd that Labour would even consider removing charitable status from schools - and I realise they’ve now run away from the idea, but decided to kick the sector anyway - yet apparently be happy for charitable status for animal charities.

but decided to kick the sector anyway

Only half of independent schools in England and Wales are charities.

https://www.bbc.co.uk/news/uk-politics-66942985

And? Labour’s still kicking the sector - because half are charities. That doesn’t answer why it’s ok to consider de-charitising(?) lots of schools but not consider taking away that status from donkey sanctuaries and rescues for Romanian street dogs.

Labour isn’t ‘de-charitising’.

Do keep up.

Did you bother to read my posts properly? I’ll repeat the relevant bit, so you can “keep up”:

”…and I realise they’ve now run away from the idea…”

Maybe that will be the next target. The amount of money bequeathed to donkey sanctuaries far exceeds the wellbeing needs of all the distressed donkeys in the country, and the excess funds could really be used much better if redirected into state schools.

But there's this pesky concept where people are actually allowed to bequeathed their assets where they wish and the charities are obliged to spend that money in line with their charitable aims and have an obligation to keep to the terms under which they receive those legacies. The idea of the state unilaterally redefining the status of assets not its own is something we should all be worried about.

But this is an entirely different question than finding a way to re-jig VAT definitions such that Eton's astronomical school fees aren't treated the same, for VAT purposes, as the operating costs of organisations whose educational output is intended to be accessed by all. Which can certainly be done without changing charity status.

So why the waffle about Romanian dogs and donkeys if you knew that the issue isn’t charitable status but tax exemptions

Wychwood School in Oxford ceased to be a charity despite the charity originally owning the buildings. Instead the charity has become a minority shareholder in the company that now owns and runs the school, with the majority shareholder being a private investment trust.

Will VAT also be applied to specialist schools? I know a friend who has a son in a specialist residential school whose fees are £115,000 Pa. How will specialist school be defined? What about children with SEN whose places in mainstream private schools are funded by the council? If the state is paying vat on children funded to attend private schools due to SEN, or because their parents are diplomats, what about children attending academy trusts?

So why the waffle about Romanian dogs and donkeys if you knew that the issue isn’t charitable status but tax exemptions

Er, because tax exemptions of one sort or another apply to all charities. VAT is only reclaimable by charities for people, in certain circumstances.

But that wasn’t my point. My point was that Labour proposed taking away all charitable status from independent schools but then decided not to. Why didn’t they consider that status-stripping for animal charities?

Because people are more likely to be more gleeful over private school students getting hit with a tax than donkeys?

Better voting fodder?

Maybe they’re not jealous of the donkey’s experience?

Or maybe, as EasternStandard says, it’s really just about appealing to a voter/MP base, i.e. playing to the gallery.

There’s nothing ‘good’ or ‘socially responsible’ about considering denying charitable status to schools, however well-off the schools are or the paying parents are, compared to donkey sanctuaries, however well-off they are, or their donors are.

(And many animal charities are very wealthy indeed.)

You have a point. I do think it’s kick a sector for votes

In a way other sectors don’t have to deal with.

But you’re just arguing about a ship that has already sailed (re charitable status and the associated tax exemptions).

The question now is why independent schools should expect to continue to be exempt from VAT on their services.

Well, that wasn’t my point. Let me put it this way: why should schools - whatever you think of the parents and their circumstances - be made less financially viable than, say, donkey sanctuaries?

Since the VAT relief arises from charitable status, it’s obviously a charity-linked policy that Labour is flying. So why punch down on educational charities and not animal charities?

VAT relief does not arise from charitable status.

Darn those donkeys!