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.

I work in a private school. It’s a special school. A very specialist special school. There are lots of children who go to private schools that could not go to a state school. There just isn’t the provision for them in the state sector. I am certain the self righteous “private schools are evil” types wouldn’t be happy if these kids were moved to their kids’ schools.

It is available to other commercial service providers - all other business which provide similar services are VAT free:
Tutors, Sports clubs, nurseries - the services private schools provide fall into categories which are non Vatable, like many other products.
Should VAT be added to the explore learning tutors, the local sports clubs ect because come people may not be able to afford it..

There is improvement needed in the education system of the UK and this policy divides people within the country instead of addressing the underlying issue.

I struggle to believe this will save money overall, the efforts should be on improving all schools so all kids can get the education and opportunities they need.

This feels like it's trying to secure votes from the parents of children not using state schools by pitting them against parents of private schools and also leaving a gap of what will actually be done to fix the state education sector.

This will not benefit anyone but will have a very negative impact on a small number of children who will have to leave their school because the parents can no longer afford it.

Sorry, I cba to wade through this thread but have a read of this article from The Times, OP.

These paragraphs in particular should give you pause for thought:-

Parents tell themselves it’s a free market. But the sector also sees itself as delivering a social good: the Independent Schools Council (ISC) argues that private schools earn their charitable status because, among other things, they take the pressure off a challenged state system and run partnerships with the less fortunate. They are allowed to define for themselves what constitutes a “public benefit”, having established in 2011 — after a long legal battle with the Charity Commission — their right to judge their own social worth.

But private schools do cost the rest of us money through “tax expenditure” — the money the state doesn’t get to spend on other schools (or paramedics, or buses) because it has allowed significant participants in the economy to avoid paying tax. The sum is an estimated £3 billion a year. In the 2021-22 financial year, Eton College (which I did not visit) would have paid more than £10 million in VAT were it charged at 20 per cent on the £50 million in fees shown in its accounts. Add in exemptions for business rates, corporation tax on tens of millions in investment income, and gift aid on millions more in donations, and the taxpayer effectively subsidises an Eton boy at a much higher rate than the average state-school pupil.

Education in any form should not be taxed with VAT, just as healthcare should not be taxed.

They'll be sticking VAT on fresh produce next, just to be fair to those who get their calories via oven chips and biscuits.

All it will do is stop private schools giving free or subsidised places to bright kids who can't afford a place, and many closing as many parents struggle to pay the extortionate fees as it is ... ths making private education even more exclusive.

If they charged foreign parents VAT, I could understand it, but not for our own.

If VAT is applied to education, all forms of education, private, state, tutor, after school club, holiday activities camp, sports club should be liable for VAT. Say state school kid can still enjoy free taxible education benifit but liable to pay 20% VAT say 1.2K per year + 0.5k for their tutor and after school club I think that would be a fair system. And I don't think any private school parents will have less objection to pay VAT on top of their private school fees.

Exactly! SLT are the cream of the crop and they’re not actually teaching children, they’re capitalising on parent fees.
I really do value teaching and teachers but because the profession is being devalued by any old person being allowed to hold the title, Oxbridge graduates would not want to be paid peanuts or be on ‘the same level’ as Tom aged 22 with a 2:2 in PE.

Luckily, I don't think that's true, at least not for plenty of people. Quite a few of the people I was at Oxridge with went into teaching, even though their peers were heading off to well paid consultancy jobs or whatever. Not everyone is motivated by status and money, fortunately. (And NB quite a lot of SLT also teach.)

Did you miss the bit in my post where I said that over a dozen regular teaching staff at my DS's school also had Oxbridge degrees?

And besides, it is highly unlikely that the SLT members waltzed straight into their current roles fresh from university. They would have started out as a new teacher, just the same as "Tom aged 22 with a 2:2", and on the same salary etc, and were presumably happy to do so.

I'm not sure why you have such a weird opinion of Oxbridge grads, and this fixation that they would see teaching as being beneath them. Sure, many of them go into highly paid jobs. But many of them are motivated by things other than money!

I have read the article. The only pause for thought that it gives me is that it’s a very misleading and manipulative article. It uses the most elitist private school in the country as its case study. Most private schools don’t have millions of pounds in investment income and gift aid donations. It also ignores that fact that private schools would be able to reclaim input VAT (just like any other business/organisation that charges VAT) so it would not be paying £10 million in VAT either. Eton and the parents that send their DCs to it are not going to be impacted by VAT change rules. Why didn’t the Times use a less prestigious school as its case study, the type of school that parents send their DC when they are failed by the state system?

It really annoys me when articles say things like "the school would pay have paid £x VAT, were it charged on school fees".

NO! The school doesn't pay the VAT, the PARENTS pay the VAT! The school just collects it from the parents and passes it on to HMRC. That's literally how VAT works.

In fact, if a private school were able to leave its fees unchanged and just slap the 20% VAT on top, then it would actually be better off than currently - because it would be able to reclaim any VAT on purchases, which they can't currently do. (In reality, a school is likely to reduce their fees slightly in order not to have to increase the cost to parents by as much as 20%).

100%
DD's comp in London has upgraded their 6th form requirements 3 times in the last 4 years.

Currently requires six 7-9 grades including English and Maths to even apply for 6th form entry. Only enough places for a quarter of the current Y11.

It's surrounded by at least 3 highly selective private schools - I can guarantee that there is ZERO chance of any children getting flexibility on GCSE grades. You've either got those A grades or you're out.

I had already read the Melissa Denes article published elsewhere. They keep rehashing the same old manipulative stuff. It is emotive and disingenuous. The picture of the Harrovians alone alongside some poorer children. It is an attack on privilege. As well as the usual very predictable mention of the Eton “brand” that gets everyone going. I wonder how much cash is made annually by journalists having a dig at Eton? It is up for grabs, a bit like the royal family or some celebrities it seems.

All charities attract gift aid and inheritance tax exemptions. As pointed out, once constituted as a charity that bit is a given, unless Government do away with gift aid for all charities. They cannot take away charitable status from private schools without huge legal implications, asset transfers etc This is also why there was not much debate about the issue when Corbyn was standing because what he claimed was all so unbelievable for anyone in the know.

Every time a Conservative Government stands to win it is a lot of benefit bashing and if it is Labour, it is privilege bashing. It is all rather toxic and tedious.

Melissa Dene benefitted from a bursary at a posh private school herself. She should not be trying to deprive other children of the same. She should not be cashing out on her stories. Why not donate all cash made from publishing these articles to the PTA of a deprived state school and ask for some gift aid?!

The vast majority of our Labour MPs send their DC to supra state schools. The type of state school that many many private school parents can only dream of. There is the real truth. Maybe we should have a privilege tax/extra council tax on those of us benefitting from outstanding state schools as well? I am quite happy to pay one. We have saved a fortune using our outstanding state schools.
I really don’t care whether Reece-Mogg sends his kids to Hill House/Eton after and Blair sends his to the London Oratory and becomes a Roman Catholic himself before that. Euan Blair is just as privileged. He went to Yale in the end, has tapped into that market, is a multi multi millionaire due to his parents’ connections.
They are all as hypocritical as each other. If someone can name a Labour MP who genuinely sent their own DC to a proper failing and deprived school, with really high FSM and SEN, please post. I think it would be helpful.

Yes will people welcome that outcome?

Maybe for the feel good kicking and no extra funding

Putting VAT on private school fees will:

1. increase the tax paid by relatively affluent people.
2. make private school even more economically elitist (out of reach for more people).

If you want 1 but not 2, why not just do 1 directly by increasing the top tax rates?

There's a good argument I think about ensuring that elites have a stake in good quality state schooling.
But if that's the motive then really we need to be debating banning private schools entirely.

For me, banning entirely is a step too far, but I think there's a better argument for it than adding VAT.

My Latin teacher was a PhD who went to Oxbridge, my history teacher was an Oxford grad... that was at prep school.

Thinking back to my secondary - there were more Cantab and Oxon on the staff list than anywhere else...

Some people actually genuinely love their subjects and don't just do something 'interesting' at university before heading for big bucks in the City or doing a law conversion course.

Generally people who genuinely love their subject will make better teachers - rather more so than the PGCE and then teaching whatever they're told to.

heading for big bucks in the City or doing a law conversion course

For Latin and History graduate, even for Oxbridge, it was not an easy exit path.

I’m beginning to think you’re a troll. There are a huge number of teachers at my children’s school who are Oxbridge and Russell Group educated. I have just randomly checked my child’s maths teacher’s qualification - Oxbridge. And yes they also have a teaching qualification in addition to a masters in their subject specialism. It’s a similar story for their other teachers. Perhaps you work at a sub par independent school but please don’t assume they’re all the same.

If your child had been to Oxbridge and ended up working in a school…. you’d be wondering what you’d invested all your money into their education for!

It’s no wonder the education system is in the state it is, with attitudes like this. We should be encouraging the brightest students to teach the next generation, not looking down on them.

The Independent sector don’t have to employ people with qualified teacher status or indeed any teaching qualifications whatsoever.

Academies and free schools don’t have to employ people with QTS either. A quick google shows that

“40.4% of primary schools are now academies or free schools, accounting for 42.1% of the primary school population. 80.4% of secondary schools are academies or free schools, accounting for 80.2% of secondary school pupils.”

So, the vast majority of state secondary schools are free to employ teachers without QTS as well.

Personally, I don’t have a problem with this and I think it should be encouraged. For example, I’d prefer a physics teacher without QTS but with a relevant degree, masters and real life work experience, over someone with a random non-STEM degree but with QTS.

Anyone can do a law conversion course - I know hundreds who have done it with degrees in everything from Medieval history to Anglo Saxon to Classics.

One of my siblings was advised to do 'something fun' at university rather than a dry law degree and then conversion even when they knew they wanted to be a lawyer at 6th form.

This highlights one of the wider issues in society which is that those with higher incomes are not necessarily those with the most wealth.

I earn a significant 6 figure salary and pay around 70k tax every year. A chunk of the school fees I’ll be paying comes from income that has already been taxed at 62%.

I was on a much lower salary throughout large parts of my career. I also have never inherited anything nor had any financial assistance from anyone. This means that my assets are relatively modest in comparison to my salary.

My FIL is wealthy through inheritance and property inflation. He has never had to have a mortgage, never had to earn money to pay for food and bills etc. He also paid virtually no tax throughout his lifetime.

It doesn’t feel right to me that I should pay such astronomical taxes when others such as him are in a way better financial position than I am. However because all my earnings are PAYE the government sees me as an easy target.

Where school fees are concerned a huge number are now funded by grandparents. If you simply increased the top rates of tax you would penalise those who are paying fees from salary while allowing the asset rich older generation a free ride to extend their financial advantage.

Top rates of tax are already so high that people are doing everything they can to avoid earning over certain limits. I’ll definitely retire earlier if the top rates aren’t reduced.

The top 1% of tax payers already pay 30% of all income tax. More needs to be done to review wealth taxes but I won’t hold my breath as it’s difficult to do and often linked to property so governments avoid it like the plague.

@Charlie2121 - Yes, and the huge marginal tax rates between specific bands as allowances are withdrawn.

I would move to a land value tax or property value tax (annual, based on real current values), and scrap stamp duty. Encouraging people to upsize/downsize as they need, not stay put in housing they may not be using.

That's only indirectly a wealth tax. A true wealth tax would be too easy to avoid in my view (like IHT), whereas a property value tax is hard to avoid.

I'm torn on income tax levels. I'm a high earner too and don't feel I "deserve" the luck that made me capable of that (time, place, genes). On the other hand, I currently live overseas and when I return to the UK will seriously consider switching to something much lower earning. That might be the right decision for me personally, but I'm not sure it's good for society.

This is me too.

Hence labour can go fk it self

People on benefits do not get any priority for state school admissions.

Are you sure? Most of the state school admission have priority to FSM / pupil premium children which usually live in low income or on benifit families.

Where is this? Certainly not the case in majority of London schools - priority goes to looked after, EHCP where the school is named then rest of admission policy which does not prioritise based on income.

A handful of super selective schools have a marginally lower exam pass mark for FSM children to try encourage them to apply but they would still need to score pretty highly.

The School Admissions Code provides freedom for admission authorities of all schools to give admissions priority within their oversubscription criteria to children eligible for a pupil premium. It is down to the state schools to implement this in its admission policy. You already point out a few London grammar schools (they are state schools) that implement this policy.