Vat Question????????

[Anoth]

Can I ask a silly question??
We have been given our school fees for 24/25 academic year now for the school my daughter attends.
My question is if labours policy comes in half way through an academic year will the schools be allowed to put the fees up for the remainder of that academic year? Eg if we start paying X amount on September and then labour get in and introduce the added vat in October. Will the fees go up in Jan of that academic year? Normally fees remain un changed for the whole of the academic year once fees have been published but I understand this is a strange situation!
Just wanted to know if I need to prepare to save more for 24/25 fees just in case or will these that are now published still remain until the end of July 25??.
Thanks!

Looking at the manicured grounds and yearly re-painting of the pavilion

Some private schools (by no means all) have old and beautiful buildings which need maintaining. Should we allow our country’s history to go to rack and ruin? Is it ok for the National Trust to spend money on maintains cultural assets or should they make “economies” too?

No-one is claiming that the VAT that the NT already charges on a cream tea is going to result in the collapse of Britains soft influence abroad and all the other hyperbole that has been posted today.

There is nothing compelling schools to pass on all, or indeed any, of the VAT to their customers. I’m sure they’ll make economies - maybe they could ask
state schools for a few tips on how to do
so.

My DC state school mows its grass too, so presumably not that way.

On the other hand my DC state school doesn’t give out bursaries to deprived pupils, lend out school facilities for free to other schools and local clubs (including SEN swimming lessons), lend out specialist teachers to give workshops in local primaries or invite other local school children to join professional workshops set up by the school. So I guess the private school could cut back on all those things?

And they could redirect their fundraising campaigns to school resources rather than local charities too…

There is nothing compelling schools to pass on all, or indeed any, of the VAT to their customers.

Making something subject to VAT means that this has to passed on. It’s a legal requirement. The only way of mitigating it is by reducing their fee level.

I’m sure they’ll make economies - maybe they could ask state schools for a few tips on how to do
so.

Most people don’t think that state schools should have to cut costs. They are heavily complaining about it. Private schools cutting back isn’t going to help the state sector.

“Making something subject to VAT means that this has to passed on. It’s a legal requirement. The only way of mitigating it is by reducing their fee level. “

Yes, that’s literally what not passing on all the tax increase means. 🙄

That literally means reducing the fees and passing on all the tax 🙄

It really doesn’t mean that at all.

Lots of state schools lend their specialist teachers to help other schools improve thier teaching, through shared insets, site visits, learning walks with feedback, mentorung schemes etc. There are groups like EYFS leads, or SENCo workshops where best practice is shared and people problem solve together. Its a key method of school improvement.

There are also loads of secondaries running things like sports leaders, or doing drama workshops at state primaries.

My state school son actually did benefit from a private secondary out reach programme, so i am not knocking them btw. But its not fair to suggest state schools dont do outreach. (Or indeed fundraise for local charities)

If you reduce the annual allowance you will go back to doctors cutting their hours to avoid huge tax bills https://www.ftadviser.com/pensions/2023/01/16/number-of-doctors-breaching-annual-allowance-grows-by-68/ and https://www.rcseng.ac.uk/news-and-events/media-centre/press-releases/pension-tax-member-survey/ . Raising the annual allowance was one of the most sensible things Jeremy Hunt has done.

The specific problems of the NHS scheme aside, lots of higher earners are putting far more into their pensions than they want to because the marginal rate of tax is so high. Many of them would rather have the take home pay and spend it in the economy now but they get so little that it's not worth it. If you were to stop them putting it in pensions they'd just cut hours instead. Our system seems to be set up to incentivise people to work less. This VAT policy is likely to exacerbate that.

They said not passing on all the tax increase. Yes will legally need to charge all the VAT, but by reducing the fee they will be absorbing some of the increase caused by the VAT. Think it's widely acknowledged that most schools will probably do this, so it will be more like an extra 10/15% in actual terms.

You’re confusing “not charging VAT” with “not passing on the increase”

By “not passing on the increase” people mean this (assume for sake of illustration that fees do not increase year on year.) So if fees are currently X, the bill after the change will be X + 20%.

However the school reduces X to a slightly lower figure, Y.

The bill is now Y +20%. So the final bill is still more than X but not as much as 120% of X. School loses revenue but may be able to manage this.

Our school is consulting on what it can cut back to be able to do the above. I presume the answer from parents will be “don’t cut anything” and this will then justify them charging X (plus normal increase) + 20%.

Out of interest what sort of % increase are you seeing for 2024/25 fees for your school?

Ours has just published their numbers and thankfully it is only a 3% increase this time round which is of course far more palatable than the 7% last year although it does all add up over time.

You mean it is widely stated by Labour politicians. It certainly isn’t widely acknowledged that most schools have been raising fees unnecessarily over the last few years in excess of those necessary to cope with large increases in their costs. There would be a lot of angry parents if they thought the schools had been doing that when fee increases have been so high overall, and it would have shown up in school accounts. You are also ignoring the fact that even an increase just to cover the full cost of VAT (so possibly around 15% when offset against VAT paid) would require cost cutting in real terms. Costs for parents are more likely to be nearer 20% increase to cover both VAT and the annual fee increase (plus VAT on that). And given schools outwith the elite are likely to lose some pupils whose parents can no longer afford it, the rest of the parents are going to have to pick up their contribution to costs too.

7% last year

which of course would be an increase of 8.4% with VAT

3.8%.

By the way, to answer OP’s original question, our school says they do not expect the change before September 2025 at the earliest.

Around 15%. Which was a lip-biter after last year's 10%. Before that, 5% was the norm.

I assume that, since my school has stated they will try to reduce the VAT impact, they are getting a large rise in now so if they are flat/ slightly reducing base fees for the next 3 years, it's from a high starting point.

@SheilaFentiman 15% is shocking. How on earth have they justified that?

Please. Bursaries and scholarships barely exist, and the figures shows what bursaries go to families that don’t need them.

@Quatty a masterful bit of statistical analysis there. I’m convinced.

Ok @Quatty it's a bold statement you just made. I don't think you're right.

How many bursaries are there? 1? a couple of hundred? 4% of pupils? I know the answer, do you?

"the figures show that bursaries go to families that don't need them". Please share "the figures".

Which figures are you talking about? Can you please share them?

Over half the students at my DS's school have some bursary support!, with a quarter getting more than 50% reduction.

How is "families that don't need them" defined in these "figures" to which you refer (but which I doubt you'll actually be able to produce)?

Tax relief on pensions has just been made more generous rather than less generous mainly due to the doctors strikes, the trouble is with any policy you can’t look at it in isolation

not passing on the increase means not raising fees, if I am charging £1000 for something before it becomes vat able and I then charge £1200 I am passing on all the vat increase to my customer and I still have £1000 “profit”. if i continue to charge £1000 and this now includes vat I have to pay £167 to hmrc my “profit” is now £833 so I have absorbed the vat in my prices instead of passing on.

You know one thing all those manicured lawns and historic buildings mean? Employment. The big old boarding schools employ loads of grounds and maintenance staff, not to mention all the catering staff, cleaners etc. People on MN often talk about bursaries as if they're the only 'good' that private schools do. But they also provide masses of local employment, in jobs that simply wouldn't exist for the most part if those children transferred to state schools.