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.

Our prep never raised the prospect of advance payment but my DS moves to a public school in September. I don’t see a downside to advance payment whatever happens. I have not seen the conditions yet but I think refunds are paid by insurance. It’s not actually a refund from the school. That might make a significant difference to that argument about refunds. I’m speculating but I think that might be covered.

And just to prove that no-one in Labour understands their own policy: this morning on Radio 4 a Labour MP said they would be "ending charitable status on private schools".
Obviously the memo on Starmer's U-turn on that policy hasn't been communicated to all of the party. People reckon that Labour will be able to turn society around when MPs don't even understand one of the flagship policies?

Wes Streeting said that Labour plan to raise money for mental health provision in schools by “ending charitable tax breaks” not “removing charitable status”.

And that’s not inaccurate if Labour plan to follow the Scottish Government’s lead by removing the mandatory charitable business rates relief for independent schools.

Possibly but that change is a very small part of their plan and not going to fund the increased spending. I think it was clear from the context (being asked how Labour would fund the increased spending on mental health support) that he was including VAT on fees. Every time a Labour MP is asked about this they seem to say something misleading. I appreciate that tax is complex and tricky to communicate clearly in an interview but it does sound as if either they genuninely don't understand what they are proposing or, more cynically, they know that the 'end charitable tax breaks' line plays better with the public so they'll go with that even if it's not accurate. Either way it doesn't inspire confidence given that this is such a prominent policy.

Err @SabrinaThwaite and how would that work with the Supreme Court ruling in the Nuffield Health case? https://www.supremecourt.uk/cases/docs/uksc-2021-0138-judgment.pdf

You do realise Scotland have a different legal system?

The point is Starmer is a lawyer - he can’t keep spouting stuff that he knows is incorrect legally speaking.

https://www.taxpolicy.org.uk/2023/06/07/privateschools/

I have linked this on another thread. The most realistic scenario is that we do not know how much revenue would be raised by a VAT policy on private schools. The underlying assumptions may be incorrect. It may end up costing the tax payer, we do not know yet. It may kill the otherwise well known private industry and just have poor outcomes for all. I think some honesty would be good.

Everyone funds things in society they don't personally use, and takes a back seat to others who are perhaps more needy or vulnerable; and those who are more able, pay more, that's how our society works. If you feel your children should take priority over someone else's child that is disabled or living in poverty, so you don't have to pay private school fees or VAT on them, then perhaps you should consider more carefully who you vote for at the next election.

Let’s be honest - it is a moral tax on private education which may or may not lead to extra revenue and may end up costing more. I think because the birth rate is going down they might be able to hide that. Maybe that is why they want to do it now. The Tories also thought they could get away with Brexit. But then they got the double whammy of Covid too and now everyone realises it was a really bad idea.

On that basis, let’s hope it does lead to more educational “equality”, at least, regardless of cost (which is an unknown).

How is me paying private fees taking anything away from a disabled child? Of course I prioritise my own child over one I don't know, don't all parents?

That isn't what I said.

Yes I do know that Scotland has a different legal system 🙄 although it’s more that charity law is devolved rather than anything to do with different legal systems.

Scotland removed business rates relief from independent schools whether charities or not and have thus set a precedent, England and Wales in can do the same - English law firms seem to think it is achievable.

https://www.birketts.co.uk/legal-update/independent-schools-the-threat-to-charitable-status-and-vat-exemption/

OK well that's how it read

When you say it’s a moral tax, you might be better saying it’s a culture war tax. As a culture war action, it means that the actual outcome for the country is irrelevant. What’s important is making your cultural enemies upset/suffer. It’s the same stuff that motivates people to support Trump. Starmer is giving his supporters a chance for revenge. Revenge for all the indignities of going to a state school and watching the private school kids go by in a nice car while you need to walk to the bus. It’s all petty stuff, but that’s where this country is.

I loathe and despise our current government and have always voted Labour - but the more I think about this policy, the more annoyed I get.

Not only does it seem barely thought through in terms of how it will actually work - but it is indeed a moral tax. It's all very well for Starmer to say he's against private schools, and will add VAT to fees, but I think parents will always, always try to do what they consider to be best for their kids. Starmer lives in the tiny catchment of an outstanding state primary where the surrounding houses sell for about 2 million. The senior schools nearby are also good - and if he actually lives in the borough of Islington, they'll have the option to apply for Dame Alice Owen's - a Potter's Bar grammar that wealthy parents tutor their kids up to the eyeballs in to stand a chance on getting in on academic ability or musical talent.

The private school system isn't fair - but nor is the reality of the above either. It's very easy for Starmer to take a stance when he's in the position he's in. The majority of parents I know who live in Starmer's area could afford to send their kids to private school (as he probably could), but they choose not to - because they don't have to! After VAT is added to fees, these families, who are opting for state, will also be joined by the families who can't afford private any more...so all the good state schools become even more over-subscribed and competitive than they already are.

The private school system isn't fair - but nor is the reality of the above either.

You’re right - and there’s the argument for doing away with the grammar school / secondary modern by stealth system.

I’m sure every area also has under subscribed schools. The oversubscribed schools are already full. They’re not going to kick out pupils to make way for all the private school students looking to join so the private school pupils will be given the shite schools. I don’t think the kids who are already in the outstanding state schools will be affected.

No, what will happen is that the private school parents who aren't super wealthy will do whatever they can to stay in private for now, while probably joining the waiting lists of the best state schools and hoping a place comes up. Some might 'downgrade' to a less expensive private school. But the next generation - those with kids in the last couple of years of nursery or primary - will look at positioning themselves geographically to optimistise their chances of the best state schools, thus making the future intake more exclusive.

Exactly @jjkkll - and for those approaching GCSE years, a move to an outstanding state school/grammar or college for sixth form will start to look like a no brainer. Because GCSE results are often higher coming from the private system, the state school pupils also hoping to get in would be disadvantaged...

Starmer’s kids went to Eleanor Palmer- 2 million catchment type thing in London. I thought they are teens now. Are they at DAO or some pushy London Academy? Anyone know?

DC’s grammar will happily take kids from private schools into Sixth Form. They just go by grades. You need pretty much straight 9s to get in.

@SabrinaThwaite - from all the legal opinions I have read most of the charity sector is AGAINST treating some charities differently for business rates purposes. Will create a mess.
Next, politicians will start telling certain charities whether they agree with their purpose or not. Read the Supreme Court judgment and opinions on it.

@Jurassictrex
I’m sure every area also has under subscribed schools. The oversubscribed schools are already full. They’re not going to kick out pupils to make way for all the private school students looking to join so the private school pupils will be given the shite schools. I don’t think the kids who are already in the outstanding state schools will be affected.”

The academy bosses I have come across will be rubbing their hands in glee to take more high achieving private school students and their parents, hoping for donations to the PTA and expensive school trips to boast about on their websites etc

Watch the Sixth Form entry criteria going up and trouble makers being off rolled to make way. At the very least, Ofsted should be regulating off rolling better. It is already happening.

I’m a a ex state school teacher now in a prestigious, successful prep school.
Please please please understand that teaching and standards are much much better in state schools.
I keep coming across threads where the assumption is that private school education is better. It is so much weaker.
The smoke and mirrors of the grounds, specialist art, dance, music and sport teachers beguile parents beyond belief.
If Ofsted were to inspect independent schools, they’d be in special measures immediately.

Then let people pay taxes and fees and go with that

If there’s no advantage but people paying more and leaving spaces in state then great

We use both sectors so have knowledge of both

Bollocks that ALL teaching in ALL state schools is better than ALL the teaching in ALL private schools. As with most of us, you have experience of 1 state school and 1 indi. You can't apply what happens in individual schools to all schools.
The truth is that the teaching in SOME state schools may be better than the teaching in SOME private schools but it is impossible to quantify.

It isn’t impossible to quantify because the standards that state schools have to adhere to are measured against all the other state schools in the country. National standards!

The independent schools mark their own homework, make up their own assessment systems and rely heavily on people paying for their children to have tutors on evenings and weekends to make up for their flabby systems. Why should they pay for tutors when they’re already paying through the nose for their children to be educated in small class sizes who come from families who value education? What is their excuse for this?
It is an absolute swindle!