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

Agreed @wonderstuff my children are both very bright and there is no way I would send them to any of the local independent schools as they get far less impressive results academically.

Tbf, my experience as a teacher (in state) is that I've spoken to parents this year who are complaining about their child not having e.g. a maths teacher, and they seem unaware of the national picture on that. There have been similar threads on here too.

I don't even know that people have thought about it as far as "it doesn't affect them"- I think they're genuinely completely unaware? I mean, if you're not aware of a massive national shortage of teachers that impacts your own child...

During the strikes I'd post on here about what it's like in state schools atm, and I'm sure a good 75% of people reading the threads thought I was exaggerating!

Most parents with children in sixth form have probably budgeted for at least some fee increase next year, surely? So I doubt you'd see many leaving at that stage. But also many state schools are set up to cope with somewhat fluctuating numbers in sixth form, I would actually say at that stage it's a bit less of an issue?

I think the biggest issue would be people leaving private at 13, which can be a natural break point in the private system but not in state.

I don't suppose many will leave during 6th form - current year 12s are reasonably likely to avoid VAT anyway and if there were a problem schools would probably work out a payment plan to enable them to complete year 13.

I would have thought that the current year 11 (and 10) are much more likely to leave. Lots of kids move at this stage anyway to get a new environment/subjects they want/avoid friendships that have gone sour. Plus there will be some parents who think their children will have a better chance at Uni if they come from state even if it's a desirable state and they have been at independent for GCSE, so they probably see it as win-win to move.

Purely annecdotal but I was talking to a colleague at work the other day who is moving her (currently yr 11) son from a well-regarded independent to state 6th form. She said they were happy with the current school but the potential for VAT had made them reconsider staying - it'd mean a jump from 40kish for 6th form to potentially £50kish and it was beyond the point it is worth it. He'd got a place at the local very sought after state school, which they wouldn't have got earlier as they aren't in catchment but that wasn't a problem for 6th form. She said moving to the state was very popular for their year and a big group were going together. Completely annecdotal but I would be unsurprised if there are similar decisions being made elsewhere.

Tbf, my experience as a teacher (in state) is that I've spoken to parents this year who are complaining about their child not having e.g. a maths teacher, and they seem unaware of the national picture on that. There have been similar threads on here too.

I don't even know that people have thought about it as far as "it doesn't affect them"- I think they're genuinely completely unaware? I mean, if you're not aware of a massive national shortage of teachers that impacts your own child...
That's a very good point.

How many threads on here are full of teachers sharing the problems in the state sector, the problems with SEN provision, the difficulties for families getting support, the difficulties recruiting appropriate staff? On a number of them, especially ones a while ago from NobleGiraffe, a lot of people were quick to argue that there wasn't a problem.

Regarding Maths and Science tutors, friends who aren’t rich and can’t afford the huge price tag here have found tutors in India for under 10 pounds an hour. The time difference is 4.5/5.5 hours ahead but it can work for students and teachers there as long as you do it before 6pm U.K. time. One friend has found a teacher who teaches in a great school in India. The accent is a little different at first but kids get used to it quickly and they can be amazing teachers especially in Maths.

I imagine that could be great if you just want to learn the subject. But perhaps not quite so good at ensuring you meet your curriculum and exam expectations.

But thats still only 6% of kids as only about 35% go to six form. The rest are a Further Ed or apprentices or neets. So the point stands.

Well Killik is a high end wealth management company, hence their survey of clients gave those figures of 27% swapping boarding to day school and 28% are going to pay in advance!!
The vast majority of private school parents are not in that world and so their client figure of 23% moving to state school seems shockingly high!
If that 23% is anywhere near correct, that is surely an under estimate of the overall "real" picture.

Paying in advance seems very risky for anything other than wealthy elite schools like Eton. If a school goes bust you won’t see the money back (or if you fall out with the school for one of many reasons)

@SaffronSpice “I imagine that could be great if you just want to learn the subject. But perhaps not quite so good at ensuring you meet your curriculum and exam expectations.”

The curriculum is online now so the tutor can check. These are Indian doctors with contacts in India - they are not going to let their DC fail due to poor teaching in UK state schools. They work with the tutors using the UK online programs at a fraction of the cost of UK private schools. There are now international payment systems to support this structure.

I get how the internet works and I was not questioning the motive of parents looking to support their children. I was questioning the knowledge and understanding of overseas tutors in the UK exam systems. Looking up the curriculum and past papers is only part of the story.

It is about 615,000 children in private schools and about 10m in state schools (and a small number educated at home). I don't think Labour will be able to bring the VAT in on day 1 in 2025, but for the parents of those 615,000 children that is a huge increase in their expenses. I think the average day school here in the SE is about £18k to £20k a year and most people have at least 2 children. So let us say £40k fees a year (£20k per parent who is paying fees assuming both husband and wife work full time), but schools can claim back their VAT expenses and may not push the full increase on parents so may be it will be a 10% increase so that could be 40k x 10% = 4k a year extra which probably many parents will pay. A full 20% more is £8k. I don't think Labour will charge VAT on the boarding school element, accommodation/meals which tends to double the cost of boarding schools but I might be wrong.

Will parents pay VAT if they are resident abroad?

“I get how the internet works and I was not questioning the motive of parents looking to support their children. I was questioning the knowledge and understanding of overseas tutors in the UK exam systems. Looking up the curriculum and past papers is only part of the story.”

It is a valid point but I think these tutors who are very smart can quickly get their head around the mark schemes and they are working with the mark schemes. Then there is also a question of AI - I think the Seneca subscription has something along those lines.
The future of education is changing very fast with the tutoring and AI systems. That is all I am saying.
British teachers sick of the state system here with network in eg India, China, Dubai can probably also tap into tutoring at the elite level there to make the most of the time differences and create a reasonable work schedule to suit themselves.
I fully expect this space to grow immensely in the next 10-20 years.

“Will parents pay VAT if they are resident abroad?”

Yes I believe so if the supply is here and consumed here. You cannot reclaim VAT on services as far as I know.

It is not just education by the way. I am not sure how telemedicine is regulated but I have certainly spoken to doctors in India where I have been unable to get access to an NHS service here. With the online pharmacy as well now, for minor ailments it is an option. Although I am not sure of the legality and licensing as these were friends willing to help us out when the NHS has simply failed us.

My overall point is that there is no point in this Labour policy whatsoever. The world is global and many skilled professionals are internationally mobile and that need not just be physical. That is all I am trying to say. As if some ideologically driven politicians are going to outwit the savvy parents. Never in a million years. You cannot create equality in a global world especially not with an ageing population. It is simply stupid.

By that logic there is no point in taxing anything at all.

But in real life that is not how it works.

This is why Sweden or Denmark with much higher tax rate can coexist with Ireland, Malta or Monaco.

At the margin people always leave. Some high net worth individuals left last year too and some will leave this year even before VAT is applied to school fees.

Just as many came to U.K. as well and many more will come.

A single tax policy, especially something as obscure and marginal as private school VAT will not cause an exodus wiping out UK's tax base. Most parents based here want to stay here irrespective of whether they can afford private school fees.

There had always been apocalyptic forecasts before changes that negatively affect rich people and/or businesses. Minimum wage, banker bonus cap, higher rate tax and so many others. Almost always nothing happens and life goes on.

@justanotherdaduser - I have just looked up our local private school fees and calculated them with VAT at 4 plus. So with VAT at 4 plus for 2024 the fees would be £20,400.
11 years ago I remember looking at the fees -just out of curiosity- for my now 15 year old. They were £10,100 at the time.
On top of the 20k will be some extras, I am sure. Lunches, trips, cost of uniform etc

It is very naive to think that kind of price rise in 10 years will not lead to an exodus of kids away from the private sector/not join in the first place. I am not that concerned about the parents using the system, more for those who are employed in private schools who all pay their taxes.
My DC went to state schools but it is very obvious that numbers using private schools will go down sharply due to the extortionate costs now. The rises in just the last few years are staggering when compounded with VAT and into a cost of living crisis/higher mortgages too.
So I remain convinced that many private schools, especially at primary level, will go bust and I hope the fall out will be dealt with appropriately. What will happen to the land, the teachers other people employed by these schools locally etc
I am pretty sure that many private school parents themselves will manage to find suitable other options for their DC where they are high achieving. It will be more upsetting for those with milder special needs and I wonder whether many will homeschool and drop out of employment if they are able to, temporarily at least.

So from a state school parent point of view I do expect many of these DCs to join state schools. It seems there is some disagreement and others believe only a small minority will leave private schooling. That remains to be seen. 12 plus at the moment are still high birth years so kids moving at that age and older are going to be a problem at transition points for state school parents, especially at 16 plus.

I am assuming that most private schools with numbers down by 20-25% will struggle massively, at least in the short term, and will have to plan for significant redundancies. Does anyone know anymore about margins in private schools? There also comes a tipping point where both parents and teachers leave preemptively to avoid that kind of scenario. I suppose some will see teachers joining/rejoining the state sector as a welcome move and some believe that it isn’t an issue at primary level due to the falling birth rates.

@WrongSwanson - “Agreed @wonderstuff my children are both very bright and there is no way I would send them to any of the local independent schools as they get far less impressive results academically.”

What are your entry requirements for Sixth Form locally? For our superselective grammars for external entrants it is pretty much all 9s in 8 subjects now! Do you really not worry one bit that the top academy state sixth forms will make the entry requirements higher to attract ex private school kids? Have you not looked at who runs these kind of academies?

Honestly, even more competition for top state schools - no thanks. I bet the very best in the private schools will be moving if their parents are middle class rather than super rich so anyone saying they will not be affected, why are you so confident?
There is always a chance a DC flunks GCSEs a bit, even if super bright. GCSE top grades are more about work ethic and being in a good place. Lots of very bright DC go a bit off the rails as teens, it is no biggie, but if you lose your Sixth Form place, it will impact long term potentially.

Lots of private schools operate with very tight margins; it would take much less than a sustained drop of 20% to tip them over the edge. Most also don’t have resources to avoid passing on all the cost increases due to VAT in fees, which will be at least 15% (they don’t buy much to claim back a more significant portion of VAT). Plus there will be the usual increase to cover increase in costs due to inflation, wage rises, utilities etc.

One place they may have to cut back is burseries.

Hello everyone. good thread, well-informed and civil.

Just quickly plugging my blog here, please subscribe and share. I'm an economist and a parent campaigning to remain like every other country in the world, by not taxing education.

And also the petition on change.org. Please sign if not already done; please ask grandparents and children, aunts and uncles to sign too.

There's also a FB group "Education Not Taxation" where we're trying to share ideas so we can build support. I appreciate it feels like a losing battle but we're increasingly getting recognition for the disproportionate tax contribution made by private school families and the schools themselves, the savings to the state system...and therefore the harm to EVERYONE ELSE if we harm private education.

I don't expect pity from anyone, but I do expect policymakers to address the unintended consequences of this idiotic policy.

Fantastic thank you.

I've got a dd in year 11, and I've found out on the Y11 thread that provision really varies for 6th form, more than I realised, and the reasons seem historic. In Hampshire, where I am, we have 6th form colleges, very few of the state schools have 6th form (none locally), where I live there are 3 colleges that dd could get to, all of them good, all with minimal grades needed to go to A-Level study, for example at Peter Symonds, seen as an excellent college, the largest in the country, gets quite a few kids into Oxbridge each year, you need 5 GCSEs at 4 or above for many of it's A-Levels - now obviously the kids getting 4s aren't the same ones going to top universities, but there's room for everyone. All local colleges have similar entry, if you're doing sciences or langauges it's a bit higher, but not crazy.

Seems like elsewhere if you are getting lower level grades there aren't places that will accept you for a-level? The draw of private 6th forms here is that they offer much smaller classes, lots of children move from private to state for years 12 & 13.

Competition for schools doesn't seem to benefit the kids. Good universal provision that can flex for larger and smaller birth rates works the best.