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

Ours already seem to be upping their fees in preparation.

This is a bit disingenuous, he went to Reigate which was a grammar school. It became a private school when he was there but he didn’t pay any fees.

Yes ours went up 8% this year, and we’ve had a letter about another price rise for September. Ds will do his GCSEs next summer, we’ve told him he will need to go to state school for 6th form.

To be fair you can read a load of this on companies house...

It sounds as though some 75% of schools will increase their fees as the schools themselves will pay vat and on top of that parents will pay 20% vat I the education element. So some hefty hikes possible..

A school which is required to charge VAT charges it on its services and then pays that VAT to the state having set off VAT is pays on what it buys against it. So would not be any kind of double VAT. School would charge parent X on a £15k school fee £3k and then pays the £3k to the state or a bit less once the school's VATable purchases are taken off.

It is not a new 20% tax on school "profits" or turnover it is just VAT as far I have seen.
There is a fairty good simple summary here https://www.farrer.co.uk/news-and-insights/vat-on-school-fees-qa/ although Labour has not drafted its laws yet so no one really knows as y et.

There is a petition against it here https://www.change.org/p/stop-labour-from-adding-20-vat-to-private-school-fees-and-forcing-kids-to-change-schools

"Closing private education tax loopholes to improve schools
What this means: Private schools currently benefit from an unfair tax break that means they avoid paying VAT on fees. Through closing this loophole, Labour will raise vital money needed to improve standards in stretched state schools with more teachers.
This funding will also help pay for mental health support staff in every school, working to boost the wellbeing of young people, many of whom still suffering the effects of lockdown."

So that looks like just the VAT point, not abolition of charitable status - the latter would have been very complicated to do.

Even just with VAT Labour has to decide if local authorities can afford the extra 20% for special needs children who to go fee paying schools. It needs to decide when a school is a school not a nursery, if it it excludes before and after school care, if it excludes the hotel element of boarding for state and private boarding schools, if it applies 20% to university fees and much else. It is a vast can of worms and might well take some time to come into force.

So what happened to grammars when those who can’t keep up with school fees move to catchment areas and tutor their kids to get into these schools? House prices go up, and places will be more competitive.

Same with good/outstanding state schools? There’s a primary near us - a colleague had her kids there (they are in their 30s now) and they lived a bus ride away) now it is in so much demand the catchment area is a few streets (I know this because a mum from school was telling me how they’d moved home - and from private school - into a house a street away to get their kids in). house prices/rent has rocketed there in the past 20 years or so.

It will be more like those areas of super selective grammars I suppose - schools like Henrietta Barnet. Here in NW London we have for decades had parents actively choosing between a range of state and private schools. Other areas of the country like NE England where I am from stopped having grammars in 1970 just before I turned 10.

I think there will be parents who can afford 20% more (or whatever the schools charge - a school may decide to cut fees so the overall fee including the VAT is not as much as a 20% increase). There will be some schools where they stop bursaries and scholarships and use the money to keep fees down for those paying in full - in other words private schools become more exclusive. There will be some where children do indeed move to the state sector.
There are 500,000 children in fee paying schools which equates to 20% of those at sixth form level. It is a matter of principle for Labour so even if it costs the state more to educate children previously in private schools it is likely still to press on with the plan.

https://inews.co.uk/news/labour-private-school-tax-wealthy-poorer-children-grammars-2875633

Gramnar heads have already warned about this

So will the VAT also be due on extra curricular lessons such as swimming and ballet?

I disagree with it either way. We couldn't begin to independent school for all of our children, but they have enough extra curriculars between them that an extra 20% rise on top of whatever would be needed for inflation would require budgeting for.

Like independent school families, we save the government money by paying for our own children's education - for us, by home educating. It already irritates me that we don't get anything help towards GCSE fees and similar. This VAT idea feels like that same level of petty envy without the likelihood of actually being a net gain for the public purse.

That's a good article to demonstrate the knock on affect that Labour are so clueless about. The simple message of "tax the rich" and the state children will be fantastically better off is completely opposite in the medium to long term.

I expect Labour's lawyers can draft something to narrow it down eg they could go for the education element of a boarding school only - usually boarding school fees are about double a solely day school set of fees but a boarding school that takes some day pupils often charges quite a bit more for the day fees which makes this is a bit complex if every boarding school once the law comes out says 50% of the fees are for the residence and food. Or they might require VAT to go on every aspect of the bill.
They would probably need a definition along the lines of full time school charges for education all day in term time for children from year 1 to year 13, not including pupils with disabilities, not including for the avoidance of doubt university fees, ( may be exclude something like the royal ballet school and Chetham's perhaps?), not including nursery classes, not including before and after school provision or homework club charges, not including school lunches, not including fees for school trips, not including schools which are solely evening or saturday schools, not including private tuition and home schooling programmes etc etc...

We have decided to take our 14 year old out and send to local comp for GCSE's as won't be able to afford the VAT if it comes in -the school is already putting fees up regularly. It doesn't seem worth the risk of disrupting GCSEs. We had been planning a move there for A levels as 6th form is Outstanding but the rest has been at Needs Improvement status because of appalling behaviour and non-existent pastoral care leading to suicides until just recently. It will be a relief not to be broke all the time but I hope the school really has improved!

No he was helped by a bursary to ensure his education was not disrupted. It's a shame he care nothing for the DC who will have to leave school before their time. If his policy had been in force when he was at school - would there have been Bursary funds to support him? Cretin.

I don’t understand how that isn’t the case? Perhaps not for all families but surely it has to be for the very vast majority?

The new government would be wise to leave VAT off school fees, instead levy a heavy tax on overseas parents who are not UK tax payers. Parents who are UK tax-payers, are not only paying their way already, but also many are middle income and struggling to get by.

"Most" overseas families are incredibly wealthy and aren't directly contributing to the treasury in any other way. It may also reduce the number of overseas kids at UK school, thus calming the School fee inflation that we've seen over the past 20 years and making independent education more accessible to UK families.

But this already happens.

I live in Birmingham where there are several selective state grammar schools.

The majority of children who end up going there have been tutored within an inch of their lives since Y3. If parents can't afford to do that, it's tough shit. It's very very rare that a kid without tutoring gets a place.

I also know of parents who have bought a cheap house or flat in the catchment areas and lied that this is their prime address to get their kids into the grammar once they've achieved the required points.

The system here is mostly bollocks. They have always taken the kids whose parents can afford to get them through the 11+. Money has always bought a much better chance.

It's a crap system

Twas ever thus.

His parents did not choose to send him to a private school, they sent him to a state school. It was not their choice it transferred to the private sector.

Parents who have opted for the private school system want to be outside the state system in terms of education - the school they chose could shut, or merge, or put fees up massively, or be subject to taxation changes - that was always known.

Also the last word in your post is offensive.

I actually would much rather have seen an end to grammar schools than these moves against private schools.

Or, how about this - grammar schools but only eligible to the top 30% of LOW INCOME kids in the area?

Few of the defenders of grammars want to do this, though, because for all the vague talk about how "grammars promote social mobility," the main fans of grammars are middle-class parents who want a kind of free private school.

Our child's school is planning to do nothing about VAT on fees. Nothing at all, except of course pass the cost on to parents. Last year and this year we have had fee increases which when combined exceed 20%. Another 20% will be crippling.
We started in the state system with no intention of going private. This changed with an SEN diagnosis for our oldest child and the realisation that their needs would never be met in the local state school. We are a middle income family - above average household income but nowhere near 6 figures - for whom paying school fees has always been a sacrifice.
I have a deep and visceral loathing of the Tory party and could never vote for them. But Labour's policy on private schools is an attack on families like ours. Taxing any form of education is like taxing children's books - short sighted and counterproductive.
It won't raise nearly as much money as Labour project. Firstly because richer schools and families will do their damnedest to avoid it. Secondly because it will trigger an exodus of pupils and a wave of school closures - the cost of extra state school places for the displaced pupils, unemployment benefits for the teachers made redundant and admin costs to manage the transfers will eat up most of the tax raised. It will also have the effect of causing a large amount of turbulence in a state system that is already stretched to the limit and ill-equipped to deal with it.
Many private schools operate much like grammars - they're academically selective but until recently were affordable to many middle class / professional families. Labour's tax will push them towards a feudal structure where only the seriously minted will be able to afford them. So they'll become less academically selective, and entry will become increasingly about who can pay the exorbitant fees. The increased cost pressures on schools and parents will also lead to the availability of scholarships and bursaries declining. That strikes me as exactly the opposite of what a meritocratic society should be aiming for.
There are many fairer ways to raise additional tax e.g. treating share dividends as income, closing other loopholes, lowering the threshold for 45% rate income tax, or introducing a land/wealth tax. Labour are not interested in fairness or financial competence but in headline-grabbing crowd-pleasers.

This is hugely valid point. Inequality in education, and thus privilege to higher education, is only measured in private vs state schools and again those with free school meals. These are easy metrics. Family background, wealth, extra-tuition etc is not considered.

Big house, two 'professional class' parents, nice cars, skiing holidays, extra tuition and state school = good; struggling to pay school fees = bad.

The grammar obsession is hard to understand, recent academic evidence seemed to show that kids who actually go to grammars do worse academically than similar students in comprehensives.

Really? Aren't schools like Henrietta Barnett and QEB the top-performing state schools in the country? Dame Alice Owen was the no1 state school a few years ago, but again it's not really a state school but a highly selective school with a sibling policy.

The comparisons are quite hard to make but eh Sutton Trust also has researched the point and agrees with Midnight. I suppose there is the issue of separation - in a grammar (and an academically selective private school - not all private schools are academically selective) you will have one school with reasonably bright children in it and then the whole ethos of the school is different from one which is mixed ability. Parents may or may not like that and in about 1970 when I was a child grammar schools were completely abolished in NE England so we have had a very long time without them in many parts of the country which itself is a bit unfair for state provision in England where everyone is paying the same taxes but gets different kinds of schools in different areas.