If you have kids in private education, what is your school planning to do re VAT?

[Ladychaise]

I have two kids at a London independent school and currently just about scrape the cost of fees. Labour’s intention to add 20percent on the fees would make it impossible to keep them there, if all that cost goes to us - it is a worrying time.

The school’s bursar is being lovely but it’s very much a ‘let’s cross that bridge when we come to it’ take on it! I get that we don’t know for certain if Labour will get in or how fast they will implement this - but surely schools should be planning for this and working out how much of the VAT, if any, will be ‘covered’ by the school?

Aware there is a lot of uncertainty but does anyone else’s school have a plan in place? Thanks so much

I think ours is waiting until the results of the election and whether this law proposed by Labour is enacted before doing anything? Could be a long time away (if at all).

I just wanted to add as my previous post might read as a bit flippant, for a comparison, David Cameron proposed on his election platform in 2009 that he was going to do an EU referendum. The referendum was held in 2016. He also proposed they were going to raise the speed limit on motorways to 80. It never happened. These sort of campaign promises can be fickle. If Labour even get in next time.

Labour have promised this for decades, and it never happened.

Most independent schools do not have cash reserves. Obviously, as charities, they spend all their money on education, so would need to shrink their offering and/or pass on any VAT to fee payers.

If Labour get in it will happen. They are very clear on their intention and don’t need to be able to vote it through parliament to do it.

Schools will have a plan but may not share it yet.

They've already said they will reduce bursaries and scholarships but apart from that are waiting for the result of the election however are starting to plan for it.

Is the 20% only for those private schools that have charitable status? Ours doesn't.

It may cost the schools less than 20% as they can set the VAT they pay on things like office supplies against the VAT they receive on fees, but their biggest cost is teacher salaries and pensions so that is not going to be much of a deduction. It is going to be quite a complex law to draft for Labour as the schools will remain charities (the vast majority are charities who make no profits) and charitable status will continue. Presumably there will be no VAT on the boarding element for boarding schools nor on tutoring fees nor university fees and perhaps not after school clubs but it is c omplex minefield and very unfair on the 500k parents, 20% of sixth formers at fee paying schools, who save the country so much money and pay so much tax in the first place.

Vote Conservative.

I have a feeling schools may start invoicing separately for each service as I believe that hot food/transport can't have VAT added. So the schools could just invoice for each service separately and that way you would only be paying VAT on the teaching? One suggestion I've seen is that they move all sports to "after school" instead of incorporating unto the school day. So instead of the school day finishing at 5pm, it would finish at 3.30 and then there would be "sports clubs" until 5pm.

Thanks so much for replies. I couldn’t vote conservative after the terrible terrible governments we’ve had in recent years….but it’s such a stupid idea of Labour’s IMO!

Masses of families I know make huge sacrifices for the schools they’ve chosen. Our local state options don’t even have space for more kids!

Your words are reassuring @SisterMichaelsHabit - I hope you are right and it will all take loads of time to legislate! But @ModeWeasel - is that right re voting in? Why don’t they have to?

They will be doing lots of scenario planning and getting things in order but probably wont make actual changes until it happens. And they aren't going to share stuff with parents like we are sitting on more surplus than normal and we have taken out a massive bank loan to fund something we were going to do from cash flow.

Ours haven't even had the courtesy of mentioning it, or even acknowledging that parents may be concerned - I'm pretty pissed off about that tbh.

There is definitely a sense that fee paying parents are made of money. I've also had no sense of belt tightening - in fact they've just announced yet another major building project, plus a roll out of very expensive equipment (although presumably they will be able to reclaim the VAT on this).

@hettiethehare I had to ask our Bursar but then lots of parents did so they put out a statement

Thanks. I know our school is a ‘charity’ - and does do a massive amount of charitable work - but it also has millions in cash reserves. Not sure how this affects things…I’ve also heard the term ‘reduced offering’ bandied about - but I don’t know what this actually means in practice? Less subjects offered at GCSE/A-level? Less co-curricular stuff? Or does it mean less bursaries and charitable partnerships etc?

well if all the parents removed their children from private schools where will they go? the schools are overcrowded as it is and very underfunded! council schools will not automatically be given a pot of money just because they have another 100 pupils joining the roll, thus making things even more difficult!

Labour tried to do this the entirety of the last time they were in power and didn't manage. I think the schools are probably safely parking this under "unlikely to actually materialise" . The complexities of charity law mean it just isn't straightforward at all.

@hettiethehare - that’s crappy. Our school has mentioned it - letter from governors to parents but it was very much ‘don’t panic and let’s see’ without any clear plan! They have also pressed pause on a big building project.

After a real uproar from parents over yet more fee hikes last year, school seem more aware that a lot of families are struggling with the cost already, and can’t cope with future rises.

@Ladychaise lol that didn't stop our school putting fees up by 11% last year!

That’s why they have ditched the idea of removing charitable status and gone straight to adding on 20% vat. Our school have said expect fees to rise by 20% pretty much immediately if Labour get in.

The proposal is for all private schools to be subject to VAT. The charitable status is irrelevant.

@2jacqi - I think Labour’s response would be ‘if you’re affluent enough to send your kids private, you can afford the extra’ - which simply isn’t true for all families.

@WrongSwanson - true but Labour seem adamant this time and seem to think it could be implemented right away.

That’s a brave statement to make before they know the full details! I would say that might put off some prospective parents. Other schools have said they’ll try to minimise increasing fees by the full 20%, eg by reclaiming VAT where possible.

I have met with our local Labour candidate , talked the issues through and he is passing it on up the chain. I told him as a lifelong Labour supporter they have lost our vote with this. If everyone who feels they would be impacted by the VAT rise communicated this to their local Labour candidate then they might think again, or at least water it down.

I teach in a big independent day school and this is very much on SLTs radar. They have flagged it up to us in INSET and Head has said it’s not realistic to raise fees by the full amount so we could potentially be looking at a 50 / 50 split. Diffferent schools have different financial foundations, A huge number of independent preps will close if this happens and a fair number of the less stable senior schools. I suspect Teachers’Pensions will be the first to be hit but that’s not really a saving as employers contributions have risen and are about to rise again. It’s a worrying time for both schools and parents. It’s also frustrating as the reality is that it’s not going to actually improve state education, it may well have an adverse effect with school closures. Having said all that I’m still not voting Tory.

My intel (such that it is, some politician parents at school; well connected head teacher) is that it WILL happen (as much as anyone can say anything will happen)and it will be backdated to be effective to the day they come into power. So paying fees in advance once labour comes in will be too late to avoid the vat.

our school is encouraging parents to pay fees in advance but only verbally: nothing in writing as it wouldn’t be good PR.

Most (if not all) schools will have been planning for this for some time. The issue is that they can’t really do anything until they know the full details. Originally, Labour voted to ban private schools altogether at one of their conferences, and redistribute their assets. Then they scrapped that idea and said they’d remove charitable status. They then realised that scrapping charitable status wouldn’t have the desired effect and have ditched that idea. Now they say they will introduce VAT on fees. They’ll probably change their plans again at some point. They’ve already said they don’t want to diverge from EU law (introducing VAT on education does that).

The point is that the Labour Party have plenty of members who hate private schools and would abolish them if they could. They will do anything to try to destroy the sector.