Prepayment of private school fees?

[Sunshineandbeaches]

If your children are at private school, does the school offer a scheme to prepay a few years’ fees in advance? If so are the fees discounted, or at “today’s rates”? I can’t find much info about the different ways schools approach it so thought I would ask the hive mind here. Thanks

You need to check the financial stability of the school as if it closes / goes into administration you will possibly lose your money.
If we have a general election this Autumn I expect more parents will ask to avoid the 20% vat charge promised by Labour in the coming years.

No fee reduction at DD's school but you would have to check with the school you are interested in because they all differ.

Thanks - yes understood re financial stability / risk point.
I know what the school offers, but interested to see the range of how other schools approach prepayment.

I've not come across any prepayment offers
Some offer fees spread across the year for an additional fee

Ours does not hold the money in an account and pays 2%interest. Then deducts fees from that account when due.

They are anticipating a 7% rise if VAT is charged and are looking into ways parents can pay upfront before VAT rules come in. I can imagine a lot of people taking advantage of this if it becomes possible.

Sorry ours holds pre payments in an account

You'd need to speak to the bursar at your specific school but when I asked they said they'd commit to a smaller increase than across the school in general so say they would raise fees by 5% per year, they'd lock in at 2%.

It’s very individual to the school.
dc 1 school - can pay 2 years ahead and the second year is fixed (no annual increase)

dc2 different school - is more structured - sliding scale of discounts 2% off year 2, 12% off year 5. Factors in a 5% fee increase every year.

in both cases the expectation is that prepayment will avoid VAT but they won’t put that in writing.

5% discount for upfront payment (either year or multiple years) (plus you get at the current rates so avoid increases in future).

2-4% discount for paying by direct debit 9 over 9 months.

I personally am very wary of paying large sums upfront because:

• unclear what the position would be if you tried to get money back if you wanted to take your child out (and in any event could take some time).
• Risk if school went under then you would lose your money (obviously increased risk of this if VAT goes on fees).

I personally wouldn’t be prepared to pay more than a year upfront, even if VAT comes in. I’ve seen too many schools go under that I would worry to lose my money.

Thank you everyone, this is really helpful. I felt sure some schools offered a discount but ours isn’t. I don’t think we’re going to do it for the reasons stated but it is tempting from the VAT uncertainty perspective.

We are at a United learning school, and we have been offered to opportunity to pre-purchase education and fix the cost at today's rates as long as we can pay in advance blocks of 2 years/6 terms at a time, also with the view of avoiding VAT increases, and annual cost rises. There are caveats to say they can't predict tax liability and the prepayment isn't refundable.

Should you decide to leave the school then you lose your money or the school changes or goes out of business there is a risk. There is a clause about exceptional circumstances so if for example ones child was expelled then, I suspect there might be a battle to be refunded but a possibility.

I am currently things mulling over, we have until the end Feb to fix this year's rates.

Ours is similar to the model of deducting a small amount of interest on what is paid upfront (a couple of percent) which reduces what one is paying slightly - HOWEVER, the school are also clear that if the fees go up annually, parents will still have to make up the difference when it does. So although you might save a bit for the year(s) that fee level is set, it's not as beneficial as one might initially think.

I can see how it makes sense if say, very wealthy grandparents are paying a huge amount of several years in advance and doing something clever with their expected IHT bill.

Re paying in advance to avoid the impact of VAT on fees when labour get in - how clear have your schools been on whether or not this will work? Ours is not entirely sure yet, and I know some are nervous that labour could implement anti forestalling laws (I think that's the correct term?) - so even if you've paid fees in advance, they could insist that the VAT is added later. I cannot see how they could actually implement this though - seems like it would be close to impossible to orchestrate? Thoughts?

Since ordinarily the VAT rate applied is that in force when the goods or services are delivered I’m not sure that labour even need to change VAT legislation to achieve what they want, since for education one can’t reasonably make the case that multiple years eduction were delivered up-front. It’s entirely normal for contracts (outside of education perhaps?) to include clauses covering that, and making it clear that the VAT rate in force at the time applies.

I would be very careful with paying very far ahead. I have a child who had a breakdown, couldn't attend and had to leave the school. In our case the school behaved very badly and I wouldn't have trusted them to give the money back as they were also having financial problems we found out later.

Tax avoidance schemes around private school fees are being targeted by THIS government, so make sure whatever you do is above board.