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!

Especially if like you say it could wipe you out of employment for 20 years.. that would be incredibly expensive!! More than private school fees + VAT for one child

@lonerider - do your DC have SEN or other issues making a good state school difficult? I would have thought part time work would be more of a compromise. We have only had experience of outstanding state schools at both primary and secondary level so I admit that I do not know how bad some state schools may be.

Does this mean VAT is likely now to apply to university fees as well??

Would you not be better to keep working and have your salary go on school fees? Unless you are a very low earner (in which case you wouldn't be paying tax anyway) 20% of fees for most schools is not going to be more than 20k a year.

IT WON'T HAPPPEN

I can't help thinking that it will cost the government more money than making money, but time will tell.

I think it will, and I don’t think anyone will be told the whole truth either. They’ll say “the policy has raised £x”, but they’ll conveniently forget to deduct the tax/state funding which has been lost elsewhere.

In theory, they haven’t said it will. However, it’s in the same part of the legislation. Even if they don’t add VAT onto uni fees immediately, it might be on their radar at some point, especially as university is becoming increasingly only affordable for better off families.

We had this debate elsewhere. The value and tax lost by people like you and me quitting is enormous and nobody has even tried to measure it. The Adam Smith Institute says the payroll tax is worth £90m for each 1% of private school children that migrate...that's if 100% of parents quit.

So say 15% of families migrate and half of them quit. or they reduce their working hours, or retire earlier, whatever. that's around £650m off the tax bill.

And that's not all because there is also impact on customers (who pay VAT) and employers (who pay business taxes) and employees (who pay payroll taxes). Nobody has even tried to measure those effects.

The Institute for Fiscal Studies, which is being used as the official guide by the Labour Party, assumes we'll all just stay at work.

A lot of families are in the position where a 20% increase becomes unaffordable though. They’re only just affording the existing fees (because of the fact that they’ve increased so much over the last couple of years, and the general cost of living). 2 children at a school costing £20k a year each (a fairly average type of day secondary) will now cost an additional £8000 a year out of net income. It’s simply not affordable for many private school families.

totally agree with this, people just look at policy thinking it affects just rich people and not them and always happy for others to pay more tax as long as it’s not them, with this policy I say be careful what you wish for

Yes but in the case this is replying to - someone saying they will quit job and homeschool, and poss be out of a job for years after. How are they able to afford to do that but not able to afford an increased school fee,which is likely to be about £20k a year. Unless they are a very low earner quitting your job is more expensive than increased school fees...

I read that post as saying that they wouldn’t be able to afford the increased fees even if they carry on working, so the option would be to to either use the state system (which has already failed them) or to home school and give up work.

It says "I'll give up my job and homeschool though".

This sort of change to the law is usually accompanied by a raft of guidance which takes time to produce. It is also unusual to pass tax legislation with this sort of impact without public consultation, though perhaps labour plans to anyway. They should in particular be consulting on the implications for special schools and children with special needs in general. They also need to consider e.g the treatment of after-school provision, boarding element of the fee, catering etc and whether schools can apportion fees to VATable and non-VATable elements. And edge cases like a school which provides some adult education or performing arts schools which might provide full time education to some students and just dance classes to others. It’s not like a rate change which can be implemented quickly and easily. The most minor of tax changes are usually now consulted on.

If they want to prevent pre-payment schemes being effective as a pp said that’s really complicated because it means either rewriting how basic principles of VAT work or having bespoke tax point rules for VAT on private schools fees all whilst avoiding unintended consequences.

Unless they implement it really badly I can’t see it being on the first day they’re in power.

'or to home school and give up work' yes exactly, but how can they afford to give up work and home school if they can't afford increased fees (likely to be around 20k per year). Giving up work will nearly always be more expensive unless you are an extremely low earner?

I get this, I was just commenting on the poster who was going to quit her job to homeschool. Most private school parents would be earning more than £8000 a year so it would be more affordable to pay the extra than to give up work and homeschool.

I don’t know the position of @lonerider but let’s take a basic example. A parent works in a job (possibly part time) which nets £20,000 a year. That £20,000 just about covers school fees now. Those school fees now increase to £24,000 a year which that person now can’t afford. There’s no option but to withdraw them from private school. The option is either state school or home school (and give up work).

It becomes more of a problem where more than child is involved. 2 children currently cost, say, £40,000. A parent’s take home pay just about covers those fees. Those fees now increase to almost £50,000. They can’t find an extra £10,000 overnight so, again, the only option is to withdraw them from private school.

There are many private school parents where one parent works solely to pay school fees. Some of those parents won’t be able to afford current fees plus VAT.

because we no longer need average £17k fees per child out of after tax income; around £32k gross per child assuming a 40pc taxpayer plus NICs. If you decide to go state or home school, it's a big saving. In lifetime terms, it's like being £300-500k better off, depending how many children, how many years to go and how many

You might (you should) ask the question another way around. How many affluent state school families, with household income (say) 50-100k, have one or other parent staying at home or volunteering or doing some "fun job" like making curtains three times a year to just about pay for a holiday? Take the school fees out of the equation and that's the option that starts to look attractive.

Going state is saving money (obviously). Giving up work and home schooling isn't. Unless you have three or more kids or ean next to nothing.

OK, fair enough. If your salary just covers the private school and nothing more.
I had not realised that this was a sizeable chunk of people.

Giving up work totally is a risk for a few reasons (presumably it will be woman who gives up work) but if a lot of people do this, it will take some of the pressures off the overcrowded state schools.

"Those school fees now increase to £24,000 a year which that person now can’t afford. There’s no option but to withdraw them from private school. The option is either state school or home school (and give up work)."

Yes agree they would need to withdraw them from private school.

But how is giving up work and homeschooling costing less money than paying an extra £4k in school fees?

If they can afford to go without the person who gives up work to home schools salary they can afford the extra 4k, unless they are earning less than 4k - and again how can they afford to be earning to little in that case.

Again, just vote for it if you like it. Have a good day.

Not paying school fees is saving money. Not need to earn school fees - because you were no longer willing/able to do so - means you look at other options. Those other options include a change of lifestyle.

As I said, a starting point of £32k gross per child. £64k for two kids.

Do you think the anti-crowd can have the following both ways?

• "Private fees are so expensive and elitist!!!".
• but "all parents can easily afford to pay more" and "if they pull out they'll obviously keep working because they'll still need the same amount of money."

Some who can no longer afford school fees will give up work (saving school fees) and use state school though. They won’t all home school. There are quite a lot of parents who choose to go to work only to pay for school fees.

We could afford it because very low mortgage which is nearly paid off. We take all of DDs school fees out of my lowly salary. It WILL get to a point whereby it isn't worth the stress of me working full time in order to pay fees when I could quit with no material impact on our standards of living in order to home school.