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.

Sorry that should be 20 plus vat not 29!

Spot on.

I disagree with you @user1486984759 and I am a fellow school-fee-payer (though neither me nor DH earn enough to pay higher rate tax so you are a lot richer than us)

Education is a fundamental human right for our children. An all-bells-and-whistles education with small class sizes, excellent sports facilities and all the best in equipment and resources is not. That's a luxury version.

a basic and adequate education is available for free. If we have sufficient money left over after paying the basics of life we have every right to choose to upgrade the education experience our children recieve but we cannot and should not pretend that it isn't a luxury to do so.

VAT is not charged on the basics of living but is charged on anything which isn't really necessary or which is the luxury version. A packet of rich tea biscuits is VAT free but a double-dipped luxury chocolate biscuit has VAT applied. If you are offered a Rich Tea biscuit for free you have every right to decline and to purchase your own nicer (and VAT liable) version.

While we were still in the EU it was not permitted to charge VAT on education. Out of the EU, we can do what we like. So long as the new legislation is worded carefully to ensure that it's only the "luxury version" schools that are caught (eg some SEN schools are independent and have a mix of LEA funded and self-funded students but are not a luxury as they are the only school available that can provide any education for those children) then I am totally supportive. It will be tough finding the extra but it's not wrong that we have to.

People are very keen to quote Finland not having private schools but this is not true. Private schools do exist but they are not allowed to change for ‘education’ . They get around this by having selection and charging for anything not strictly within the curriculum so for example sport, compulsory clubs etc

This is a pro elitist policy which will enhance the divide between the have and have not.

Taxing education is fundamentally anti education and anti aspiration and this policy alone will have me voting Conservative at the next election. Galling as that is.

VAT is not charged on the basics of living but is charged on anything which isn't really necessary or which is the luxury version

VAT isn't a luxury tax, it's a general sales tax. And is levied on all food in some EU countries (such as Sweden)

It's how Finland gets round the 'no fees' rule - private schools supply lessons for free and then charge for the compulsory extra curricular.

And yes, Labour dropped charity status last night, but on the radio this morning, Starmer is saying it will be up to the schools if they charge parents VAT, but they will have to pay VAT on goods and services... which they already do.

I don't care that much about what happens with private schools. However, when you bring arguments like this to the table it rather makes me think they should be subject to VAT rather than be on your side.

Because:

•There isn't any priority system for people on benefits in school admissions

•Most people receiving benefits in this country work and get top ups due to poor wages and cost of living, which is the fault of governments. They pay tax.

•People in lower paying jobs work hard too and I would argue in some cases harder. There are some jobs that are desperately undervalued that I could never do but without which society couldn't cope.

•The "we pay 45% tax" thing is a bit bullshitty. You don't pay 45% on everything you earn and actually due to taxes like VAT and council tax people on lower incomes tend to have a higher tax burden overall. For the poor sections of society about 45% of total income is spent on taxes of various sorts for the more wealthy it is more like 33%.

•You have the choice not to use private school. The place in state school is there for your child at any point you want to use it.

This sounds like no change

How confused it all is

Doesn't exactly give one much confidence in their ability to manage the country...

Starmer is saying it will be up to the schools if they charge parents VAT

I mean this is no VAT. No extra 20%

How are they so unclear?! Every time. It’s ridiculous

@EasternStandard yes private schools already pay VAT on services but currently can't claim it back. He sounds extremely confused and unclear about the current status quo.

Parents now are making decisions on schools and schools too on what they need to do and no one knows what they’re on about

It sounds as if Starmer doesn't understand the basics of how VAT works.

I really hoped we'd have the prospect of a government with integrity and competence at the next election.

State school kids are going to get crushed in grammar school admissions if people start switching from Westminster Under and St. Paul’s Junior start applying for Queen Elizabeth Barnet or Henrietta Barnett. So be careful what you wish for.

Excellent points!

He understands he is just trying to obfuscate and confuse . He is right that schools could reduce their fees to the point where the fee plus the 20% is the same as the fee without the VAT , but no school is going to be able to do this not even the richest . For example ;

fee currently £5000

fee after VAT should be £5000 plus 20% VAT total £6000

if the school absorbed the VAt

fee£4166
VAT £834
Total £5000

the school will therefore get £834 less than they would have done. In either case VAT must be charged by the school on the net fee

Why are you so firmly of the believe that privately educated children are more intelligent than those in the state system?

Well said

He understands he is just trying to obfuscate and confuse

You are probably right but that also fails the integrity and competence test!

He surely can't have said that?

It just can't be up to schools - either VAT is imposed, in which case it must be paid, or it isn't, in which case no-one's going to do it.

If he really thinks private schools are routinely overcharging parents to the extent they can cut fees far enough to countervail 20% tax (ie parents pay the same but the tax is paid) then I think he may well be wrong.

And being wrong on that will undermine the assumptions on number leaving private education because they are priced out, which could mean a very difficult transition period, especially in the towns and cities where more than the nationwide average attend private schools.

What is luxury though?Our local state secondary said that my ds with multiple extra needs did not need small classes as he wouldn’t be able to cope with exams . they would say the small classes, individual tuition etc was a luxury .

We sent him to a small school where he was in a class of 10 , has maths , English and several other GCSEs , holds down a good job, pays tax and volunteers for a major charity in his spare time . He has more than payed back .

I think your question might be better framed as "are DC who attend elite selective prep schools and who have already passed exams of similar style to 11+ , and who have regular exams there more likely to do well in other exams?"

I do not think OP was suggesting that. However, If you get into St Paul’s or Westminster you are indeed very intelligent. These children would go to the best grammars if needed due to financial implications on adding 20 percent to the school fees.

I missed it but reading posts here I’m as incredulous too