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VAT on private school fees

1000 replies

user1486984759 · 27/09/2023 20:42

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.

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user1486984759 · 28/09/2023 10:13

@Notsuredontknow I did not say that. I would say that parents of privately educated kids are willing to invest significant resources into their kids’ education. So even if these kids went to state schools, they will get vastly more tutoring because money saved on tuition fees will get spent on tutoring.

And generally private schools are teaching more advanced material than state schools are. My six year old finds Bond 8-9 year books too boring and easy.

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OhCrumbsWhereNow · 28/09/2023 10:14

Notsuredontknow · 28/09/2023 10:05

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

More a case that those children who would have been sitting exams for private schools and have been prepped and tutored for years for the purpose will now set their sights on places at state selective.

So you are massively increasing the pool of highly prepped kids going for those. To be fair, most of the kids sitting those tests have been prepped whether state or private, but it will almost certainly affect those children whose parents were trying to do it at home with a few Bond books, or who can't afford any tutoring.

Notsuredontknow · 28/09/2023 10:18

@user1486984759 Fair enough, I understand what you’re saying. A few of your posts have hinted at the sentiment I mentioned though (there was an early one where you said “perhaps if more people were state educated they would realise…”) so that might be why I jumped to that conclusion

user1486984759 · 28/09/2023 10:31

@Notsuredontknow I do not believe that private school kids are smarter, just better trained/coaches. I actually do believe in creating equal opportunities for everyone, eradicating the classism in the UK and improving social mobility. However, unless you make wholesale societal changes like abolish monarchy and House of Lords, nationalise private schools (which is actually something I could get behind), etc. etc., none of these issues will go away. All these pronouncements from fee-paying grammar-school educated Starmer (and Corbyn before him) do is throw the upper middle class under the bus to get some votes without harming the lords and ladies who rule this country and who will still go to Eton (despite the VAT) which will continue to churn out future UK PMs.

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Legoninjago1 · 28/09/2023 10:34

I expect these things will happen:

  • private schools will still exist and be even more elite, as many who currently just afford it will be squeezed out and there will be few or no bursaries. More international kids will come into the boarding schools.
  • the best state schools will be even harder for most people to access as former private school parents will use their funds to buy property next to them and tutor their kids to ensure they take places in the selective ones.
  • those parents who were paying school fees get to keep their funds for themselves and plough them into property near the best schools, pushing up prices in those areas and creating more wealthy bubbles and de facto private schools.
  • a lot of parents (probably mums) who currently work to pay fees will stop.
  • we've already established that the excess revenue to the country from this crowd pleaser policy is negligible when looked at as a net net sum.
I really can't see any winners except Keir Starmer ... briefly.
user1486984759 · 28/09/2023 10:40

@Legoninjago1 very nicely summarised. Fully agree!

If we stop sending our 2 kids to private schools, that’s an extra £6k per month we can spend on our mortgage. Basically we will save close to a £1m cumulative from reception to A Levels.

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Mummyoflittledragon · 28/09/2023 10:43

Hooplahooping · 27/09/2023 23:17

The greatest trick of the global elite. Is convincing the lower middle + working class population that the real problem is the upper middle class.

let’s all salivate with rage about the lawyer busting her gut 70hrs a week to pay 50% tax into a system that won’t stop banging on about how unfair her salary is.

while bezos / big tech companies / the royal family sip their champagne unchallenged behind the smoke screen of anger they’ve whipped up.

Tax is the best way we have of redistributing wealth. But if y’all keep hacking away at the economic engine room of a country, you’re going to have less economy to share.

Agreed. We only have to look at rishi sunak’s wife. I said at the time if they were really contrite, she would have calculated and paid back taxes as a gift to charities / schools / nhs etc.

fyn · 28/09/2023 10:44

Our daughter is 3 and has just started pre school. The schools are all on one road and the pre school, primary and secondary are all outstanding.

We were pleased to have bought in a great catchment and hadn’t really considered private but three weeks in her education is already being disrupted by naughty children. She’s being hurt, tells me about stories being interrupted, snatching. I spent my whole time in school sat next to naughty, disruptive boys helping them.

We are pulling her out and she’s starting prep school next term. We will look at the all girls grammar near us when the time comes but I don’t want her education disrupted. It’s a shame that state schools aren’t able to effectively deal with these problems. The potential extra 20% will definitely stretch us but we will just cut back in other places.

morechocolateneededtoday · 28/09/2023 10:45

@Legoninjago1 you have summarised our situation perfectly.

We have 2 DC in private primary education and have been deliberating whether to go down route of state or private for secondary. Due to the threat of VAT (which may not happen as PP have highlighted pretty well how difficult it will be to extract one section of education from VAT exemption), we are going to go down state route for secondary.

As a result, we will be moving into catchment of a nearby excellent state school (currently just outside), I will drastically reduce my working hours to less than half of what I currently do as will no longer need to pay fees. Any additional savings we have will be put into pension for tax relief. The new property will probably increase in value while we live there.

Many other parents at our prep have similar ideas - this is far from the winner labour believe it will be

Letsgetouttahere2023 · 28/09/2023 10:46

@Legoninjago1 you are 100% correct.

It's Ill thought out political point scoring which will only serve to benefit the ultra ultra rich (10s to 100s millions) and particularly the international wealthy, especially this group as they can claim back VAT!

Everyone else will be worse off one way or the other.

Kier needs to go or to drop this policy before any elections happen.

CurlewKate · 28/09/2023 10:50

@user1486984759
You know what people who can't afford to buy food/pay their rent are told? "Get a better paid job" If you can't pay school fees I suggest you try that.

SabrinaThwaite · 28/09/2023 10:53

cyclamenqueen · 28/09/2023 07:45

So cross hearing this interview . Independent schools already pay VAT on what they purchase ( I know I am the person paying the suppliers) This policy requires them to charge VAT , yes they could reduce the fees so that the VAT inclusive amount is the same but this is unrealistic . Either he doesn’t understand his own policy or he is being deliberately obtuse to confuse the voters who mostly don’t understand arcane VAT rules.

I’ve just listened to Starmer on R4 Today just after 7.30am. He didn’t say that.

What he said was it’s up to schools how they pass the VAT cost on fees on to parents (and that what is being reported in newspapers today).

https://inews.co.uk/news/vat-rise-private-school-fees-not-attack-says-starmer-2648083?ico=above_article_ticker

Scaevola · 28/09/2023 10:54

Due to the threat of VAT (which may not happen as PP have highlighted pretty well how difficult it will be to extract one section of education from VAT exemption), we are going to go down state route for secondary

I don't think it's particularly difficult.

Just rather illogical to impose VAT on the years when education is compulsory, but continue exemption for those when it's not.

And of course it will require competent drafting and administration - and that's the bit I'd worry about. I don't think standards of competency in administration are anything like what they should be, plus some of what Starmer has been saying about this policy area is either wrong or muddled.

Scaevola · 28/09/2023 10:56

SabrinaThwaite · 28/09/2023 10:53

I’ve just listened to Starmer on R4 Today just after 7.30am. He didn’t say that.

What he said was it’s up to schools how they pass the VAT cost on fees on to parents (and that what is being reported in newspapers today).

https://inews.co.uk/news/vat-rise-private-school-fees-not-attack-says-starmer-2648083?ico=above_article_ticker

That's a prime example of what I mean by muddled.

Does he really think school fees can be cut by enough to offset a 20% increase? He cannot be that ill-informed. Or is he just hoping people won't examine that bit too closely?

EasternStandard · 28/09/2023 11:01

Scaevola · 28/09/2023 10:56

That's a prime example of what I mean by muddled.

Does he really think school fees can be cut by enough to offset a 20% increase? He cannot be that ill-informed. Or is he just hoping people won't examine that bit too closely?

What is the extra VAT actually assigned to?

How does this all work?

@cyclamenqueen or those in the know it’s good to have your insight

morechocolateneededtoday · 28/09/2023 11:02

Scaevola · 28/09/2023 10:54

Due to the threat of VAT (which may not happen as PP have highlighted pretty well how difficult it will be to extract one section of education from VAT exemption), we are going to go down state route for secondary

I don't think it's particularly difficult.

Just rather illogical to impose VAT on the years when education is compulsory, but continue exemption for those when it's not.

And of course it will require competent drafting and administration - and that's the bit I'd worry about. I don't think standards of competency in administration are anything like what they should be, plus some of what Starmer has been saying about this policy area is either wrong or muddled.

As other have pointed out, how to exclude nursery and university fees? Then you bring in extra curriculars and wraparound care.. which activities are charged for and which are exempt? Tutoring? And not to forget that academies are private organisations so to avoid them getting caught up in a VAT grab..

Our private school contracts specialists for a lot of teaching within the school day, for example the whole school has Lamda lessons on a Tuesday as the specialist is contracted to come every week. What is to stop them removing this from the fees and having this as an add on where VAT is not paid? Then factor in all the other visiting specialists...

Based on current communication and the fact that the party themselves don't even understand what their aim is, I cannot fathom how they are going to achieve this

BodgerSparkins · 28/09/2023 11:02

First time poster, but I read all of this thread and felt compelled. It's probably a feeling I should ignore.

"Private education is not fair. Those who provide it know it. Those who pay for it know it. Those who have to sacrifice in order to purchase it know it. And those who receive it know it, or should. And if their education ends without it dawning on them then that education has been wasted." - Alan Bennett

Someone within the thread mentioned that it is to the benefit of the truly wealthy to encourage friction between the working, middle and upper middle classes - that would seem to be a valid point.

Someone else pointed out that it makes more sense to tax true wealth more rather than fiddle about with punitive measures which likely have unintended consequences, that also seems to be true. It's to everyone's benefit, a more equal society is a happier society for everyone - even those at the top. I don't think anyone wants to live in a country where they have to move between gated enclaves, even if they are behind the gates. By wealth I mean obscene wealth, likely not anyone that receives a salary for actual work. Obscene wealth and the hoarding of assets is damaging in ways that are far reaching and often poorly understood.

I think we all underestimate how much cognitive bias there is at play when we attempt to make school choices, indeed any choice. People believe that when they pay for something, or pay more for something it must be better.

In the city we live in the private schools are all in beautiful buildings and the wealthier parts of the city - but their results aren't always fantastic. In fact, sometimes they lag behind the state provision, and had done for years when we were looking at options but people continued to fork out the for the fees. It was bewildering, and yes here I admit I briefly considered giving my own child that unfair advantage, but it turned out it wasn't necessarily an advantage at all.

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. He went to his local primary, which was excellent and in a poor area, the two not being mutually exclusive, and he and all his class mates results far outstripped those of his peers at the private school. There is wild variation in both sectors, and I think sometimes we cloud our own decisions with value judgements we aren't even aware we're making.

This works in the opposite direction of course, we (collective we, society as a whole) undervalue things we don't 'pay' for, or assume things that are cheaper must be worse. It's often not the case, despite it all. I grew up in a leafy North London suburb, my primary and secondary were outstanding, did I value the advantage I had as I should have, did my parents? Probably not, they just picked what was closest.

It's a sensitive thing as the overarching feeling on the side of those who don't want to see this change is 'I pay my way, I work hard, why should I be penalised by those that don't do the same?'...I think if this half examined that feeling they would know they were being disingenuous. They would know, likely from their own experience, that there are plenty of people out there that work harder, are more intelligent perhaps even more qualified and less privileged, and indeed paid less. I know that there are people who are more able than me, who work harder than me, who are in a less privileged position. So let's let go of that one. I would also hope that nobody seriously believes just because a child or a family is less well off, that's a measure of their ability, intelligence or really anything at all - and vice versa.

I picked up in this thread on people arguing simultaneously that private education in this country produces better educated people, and those that tend to rule the country. In the same breath pointing out how unintelligent our leaders often seem to be, how stupid and unexamined and short term their decisions - sentiments I would tend to agree with - but you can't have both be true.

Is it not more possible that people who move within a section of society which is small and interacts little with other groups have a distorted understanding of their own abilities, an underestimation of those of other people and a misplaced confidence installed in them by the very system that made them this way? Maybe.

Also someone argued that our GDP demonstrates how our state education system is failing...I really don't have time to unpick that one. I do think there are failures in our state education, but I don't think they're what is borne out in GDP since 2008 and that a lot of these failings are down to the incompetence of a ruling class who are, as the posters themselves point out, often privately educated.

To throw a further cat amongst the pigeons, some Universities (likely older, wealthier) don't have charitable status but have Royal Charters so sit under neither bracket.

Someone quoted Shankar Vedantam on the radio this week. Shankar describes in one of the episodes of hidden brain, being out swimming one day in the ocean and believing he was a brilliant swimmer all of a sudden. He describes feeling that every stroke he took seemed to carry him further, and more gracefully than everyone else. He thought he was a great swimmer. He then realised he was in fact caught in an undercurrent and that is what had been carrying him, and that now he was far out and had to swim against the same current to return to land (a much harder, less graceful task.)

It's an excellent metaphor for advantage. There are times where the current has carried me and I have thought myself a much better swimmer than I probably am, equally there are times when I have found myself feeling far less capable than I am because the currents are working against me, to feeling like I am floundering and that every stroke I take carries me nowhere. I suspect we've all felt both of these sensations in life, and also know that there are people born swimming against the current who are better swimmers than we could ever be.

Perhaps rather than focus efforts on railing against measures that may or may not ever come into force, private institutions should step up to the idea of their charitable status and help far more of those children that, despite being excellent swimmers, find themselves swimming forever against the tide.

Mummyoflittledragon · 28/09/2023 11:03

Scaevola · 28/09/2023 10:56

That's a prime example of what I mean by muddled.

Does he really think school fees can be cut by enough to offset a 20% increase? He cannot be that ill-informed. Or is he just hoping people won't examine that bit too closely?

Hmmm disingenuous. This just makes me wonder how intelligent he actually is.

Firkinhavinalaugh · 28/09/2023 11:09

Ultimately, there are more lucrative areas to target and this is just a useless cake sprinkle policy that just riles up the electorate and actually makes fuck all real and long term difference to finances.

its Labour Party fluff and glitter, whilst we all focus on a rather useless headliner it diverts from knowing about any real and useful policies.

SabrinaThwaite · 28/09/2023 11:21

As other have pointed out, how to exclude nursery and university fees?

By careful drafting of legislation to exclude particular ages and specialist provision (SEN for example.)

OhCrumbsWhereNow · 28/09/2023 11:25

SabrinaThwaite · 28/09/2023 11:21

As other have pointed out, how to exclude nursery and university fees?

By careful drafting of legislation to exclude particular ages and specialist provision (SEN for example.)

I wonder what happens to schools such as specialist performing arts where some kids have government grants and some pay full fees.

Or those where it's a bit of a mix - some kids on specialist placements and the rest not. The choirs schools for example where the cathedrals pay the school fees, but the other students are fully private.

morechocolateneededtoday · 28/09/2023 11:28

SabrinaThwaite · 28/09/2023 11:21

As other have pointed out, how to exclude nursery and university fees?

By careful drafting of legislation to exclude particular ages and specialist provision (SEN for example.)

What about wraparound care? Specialist teaching? Clubs and activities? Sports? Tutoring? Musical instruments?

Schools that have a high proportion of SEN students but not a SEN school?

SabrinaThwaite · 28/09/2023 11:41

morechocolateneededtoday · 28/09/2023 11:28

What about wraparound care? Specialist teaching? Clubs and activities? Sports? Tutoring? Musical instruments?

Schools that have a high proportion of SEN students but not a SEN school?

All your examples can be covered by careful definitions in legislation.

LAs currently cover around £1.5 billion on fees for SEN students in independent schools, mostly special schools - it’s been clarified students with an EHCP would be not be subject VAT on fees (either through exemption or zero rating).

morechocolateneededtoday · 28/09/2023 11:49

SabrinaThwaite · 28/09/2023 11:41

All your examples can be covered by careful definitions in legislation.

LAs currently cover around £1.5 billion on fees for SEN students in independent schools, mostly special schools - it’s been clarified students with an EHCP would be not be subject VAT on fees (either through exemption or zero rating).

I disagree - as soon as you put all these 'careful definitions' in, they are simply creating an endless list of loopholes. Loopholes the fanciest private schools in the country will exploit to ensure the majority of what they provide is exempt from the extra VAT. The smaller private schools will likely end up closing (the ones that are providing specialist teaching or huge benefits to SEN students) and the divide between rich and poor widens.

The end outcome will be an increased cost in creating and administration and very little increased income to the treasury. I doubt they will raise a fraction of what they aim to

SabrinaThwaite · 28/09/2023 11:54

The IFS disagrees with you.

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