How soon might a Labour Government put 20% VAT tax on private school fees?

[jennylamb1]

That really. Given that an election date has been declared for July, how soon might a Labour Government set their first budget?

If youve spent years in this sector then I’m sure you know that attempting to make concrete predictions about a policy that is a long way off fully formed is a fools game.
given the presence on this thread - as you must be aware - of parents who have chosen independent because the state can’t or won’t meet their DC SN, you might want to reconsider your rather insensitive choice of language. Trust me, the struggles I’ve been through on this front which I would never have coped with without legal expertise don’t feel like navel gazing. That’s privilege talking.

I have thought this too, it should be done from starting when policy is introduced, ie a soft roll out.

Assuming this goes ahead, I'm interested in what impact it will have on the duty of private schools with charitable status to voluntarily participate in supporting local state schools, especially the ones that are providing staff as trustees to state academies. There's a school opened near me that is a joint venture between an existing academy trust and two prestigious private schools - they're obviously hoping the involvement of the private schools will give them a badge of quality, as well as opportunities for their students to participate in joint activities. There are other similar initiatives nationwide, so hopefully they won't all collapse as a knock-on effect of this policy.

It's so odd that people think their tax is subsiding private education "tax breaks" - how exactly?! Who do you think is paying most towards education in this country - the people you're trying to hurt. I pay around 80k of tax (just me, not including my husband), I don't take up 2 state education places and then I pay for my DDs school fees. I pay for things like private health insurance so I take absolutely as little as possible out of the system and pay a lot of tax. I did NOT however come from money - the complete opposite; I was just fortunate to be academic and worked hard. So there is no wealth sat behind us, we pay for school fees out of net income. It is therefore people like us who will be affected - not the people with inherited wealth.

I get that people don't like the idea of private education - and I completely understand why but I think some of that is borne out of a lack of understanding of what most private schools are like. Ours is very small and provides a different type of education - it's not academic - it's for children with a wide range of abilities and issues. Driving some of those kids back into state just isn't the answer- that's where a lot of them (including my DD) started off. I heard yesterday that 1 in 5 kids in independent schools have SEN - do we really want them forced back into state education for the tax payer to pick up the bill?

Most independent schools are non profit making.

Unfortunately I think most schools are planning to stop all community help to keep the impact down for parents (as an anecdotal sample four ones I know are).

How are these overseas branches funded? Is the UK government giving loans to these Asian and African students to cover the fees? If a UK citizen were to attend such a branch, would they receive student loans?

It’s one of Labours main policies and it’s impacting some families. They have every right to express concern. It doesn’t mean that they aren’t concerned about other issues. Telling people to shut up, which is basically what you are doing, is not acceptable.

very few argue that using the private sector to cut nhs wait lists should be stopped as it’s not fair

Actually, a lot of people I know feel that it's not fair that people who can afford it can "jump the queue" for hip replacements, etc., by going private, and that medics who had their educations paid for by the state should be required to provide their services through the NHS.

@user149799568 i meant specifically the nhs ops being done in the private sector to boost state capacity - as my mum’s is…

@user149799568

The universities fund the overseas schools themselves as profit-making concerns.

The UK govt does not generally provide loans to overseas students to study here, they must pay their own fees and living costs (and prove that they have the funds available before they are granted a student visa).

For UK students wishing to study abroad, I imagine the Turing scheme would cover fees to overseas branches of UK universities. But as a service provided abroad, it would be free of UK VAT. Nowhere else charges tax on Education.

So, yes, I'd imagine those places will be very popular if they cost less than studying in the UK.

Surely there is a one significant difference from the last time Labour were in government and 'didn't manage' to bring in VAT on school fees as @SpaghettiWithaYeti says - and that's that were were part of the EU at the time and subject to EU law that wouldn't allow it. A Labour government this year (post Brexit) would not have the same restrictions, so I don't think you can be so confident that 'it might not happen'.

UK general election live: Labour would tax private schools immediately, says Starmer — follow latest

www.thetimes.co.uk/article/410063e9-4962-429c-bcfe-b5bce776e278?shareToken=4b3abfe1b8913218e39742a08fc9425a

Most private schools don't need to increase their fees to cover the VAT introduction. There should be a backlash against how much private schools charge rather against Labour's policy, the intention of which is to redistribute money to schools at which 93% of the school population attend. If parents wont pay the extra, then the private schools should think of innovative ways to cover it....maybe rent out their fancy sports facilities to local communities or don't build those extra tennis courts.
Maybe they could seek advice from the leaders of state schools on how to maintain standards in the face of numerous financial challenges (covid/inflation/cost cutting) over the last few years.

Although parents say they will pull them out of private school, I bet most don't don't as its a question of status.
And the argument that it will end up being bad for state schools is overstated too. My children go to an excellent state primary school in London but we want additional pupils as it provides more funding.

The irony being that a lot of the parents who I have heard moan about this issue are planning to take their kids out of private school for sixth form, not because they cant afford any increase in fees but to increase their chances of getting into Oxbridge (who rightly are now increasing their state school pupil numbers). Always playing the system.
I'm sorry but if this is your biggest issue in the election, I have no sympathy. There are more families in the country worrying about whether they can feed their children than there are worrying about not being able to send your kid to a fancy school. God forbid you have to send them to a state school and hang out with the "riff raf".

To what extent do we think Labour have considered parents will just reduce hours/stop work if the Private Sector falters?
I have 3 at a school @ £12k each ish plus sibling discount.
We can’t afford a 20% hike.
If they have to move back to State then so be it but I will definitely be reducing my hours at work to get out of the 40% tax bracket. I wouldn’t need the money and I can have a better work-life balance!
Other parents getting close to retirement age are talking about taking early retirement if they no longer pay school fees.

There are over 600 kids at our school and 2 other local Privates too. Just checked the Council website and there are 4 junior and 26 senior places available across the City right now.
Where are some or all going to go and who is going to teach them given teachers are fleeing the profession? It is going to take years of planning to work it all out surely?

I know quite a few people that have had to scrimp and save to afford private school places for SEN children. Due to no provision at local schools. I hope they don't do this as I doubt they will afford the places. It isn't only the wealthy that use private schooling :(

The majority of the school's expenditure is non-VAT-reclaimable so yes, they do need to increase fees. Many schools are already charities/non-profit-making and are always looking at ways to reduce costs but they are subject to the same COL hikes as everyone else.

> " I bet most don't don't as its a question of status."
You haven't read many comments in this thread then describing why parents have made that commitment.

This is simply not a good way to raise revenue. ~£1.4bn is a paltry amount and based on a complete gamble on how many parents will continue to stump up. If 10% leave that goes to zero, more than that and it makes a loss. Even if that happens to go well it will stop being profitable in a few years as fewer kids will be joining in reception.

Our schools need funding and you can still tax the rich, do it properly in a sustainable way.

It's lucky for you (and Mr Starmer) that you have an excellent state school nearby but many do not. Is compounding the housing crisis with even more inflation in certain catchments a better option?
How does your excellent school have available spaces? That is not the case for most good state schools.

> if this is your biggest issue in the election

It's Labour's choice to make it one of their big 6, not ours.

> I have no sympathy

That's the problem. Everyone is so busy not having any sympathy they're not looking at whether it is actually a solid way to make badly needed income. Which it is not.

Having listened to Starmer on Radio 4 this morning, this was my own personal interpretation:

blah blah blah, I am not tribal and I want to avoid tribal politics, yes we will tax private schools but as to timing it depends on Parliamentary time. Aka there will be a discussion in Parliament. This is an incredibly tribal policy, his heart is not in it one bit from my interpretation. It is there to placate the far left.

I was more interested in what he had to say on Palestine. Again, yes Palestine should be an independent state in his opinion blah blah blah but there has to be international consensus. Aka he would never go against the US!!! He is trying to placate the Muslim vote, but cannot be seen as antisemitic.

So I suggest everyone listens to it.

Starmer is a lawyer. He knows that private school parents have to give at least one term’s clear notice to leave, he knows the state school budgets are set in September based on the census, he probably knows many boarding schools require a full year’s notice. By 4 July most people can no longer give one full term’s notice and state schools would be screwed if many do leave by January 2025.

The other thing the Labour Party must know is that a large amount of the higher earners in places like London have dual nationality some even triple. For good sake, even Simon Rattle took German citizenship. They must know that they need to be somewhat careful in not pissing off their cash cows.

‘everyone going to private school drives old bangers’

Nope. Loads of Porsche, Jags, Teslas, Range Rovers etc at our school. Super loaded. There are old cars too. I add an old car but it broke down in the middle of a dual carriageway. So then I bought a new one.

Not quite sure why people keep talking about cars.

When the poor are struggling, the political message is often 'get a better paying job' or 'work harder'

But high earners are apparently going to down tools the minute their tax bill rises.

if you cut your hours to get under the 40% threshold, then maybe, someone else will be employed to cover that work you are no longer doing. Maybe someone who wants the extra money to cover the increase in school fees, or to pay for drama lessons.

Win, win.

"Starmer told the Today programme on BBC Radio 4 that the new tax would be implemented “as soon as it can be done”. He added: “Obviously there will have to be financial statements etc. It is a question of the timetable in parliament. But these first steps are intended to be done straight away.”" So I agree with the comment above - this is not likely to be a top policy to be done quickly.

He might well start a consultation right away.
There is also the chance (if Mumsnetters avoid voting Labour) that he may be coalition with other parties who may not support the policy so having to make concessions on policy to keep power.

On the comment by someone else above about the public benefit duty under charity law if schools have less money they can make less public benefit so yes their efforts in those areas can be stripped away allowing them to concentrate on the children of those who are paying the fees so I suppose that might be positive for parents in that sense.

@Araminta1003

> we will tax private schools but as to timing it depends on Parliamentary time. Aka there will be a discussion in Parliament.

Does that mean anything? There have been plenty of discussions in parliament where the opposition note many flaws and those in power give a curt response and just do it regardless.

> This is an incredibly tribal policy, his heart is not in it one bit from my interpretation. It is there to placate the far left.

Interesting. The way I've heard him blast it out on repeat, and include it in his big 6, I thought it was a personal vendetta. Are 'the far left' really in to this particularly? I'd have thought they'd prefer some more general 'tax the rich' policies that pull in significantly more money on an ongoing basis.

I notice you say ”maybe”….the problem is we have a skills shortage and don’t have enough people to fill many of the highly paid, skilled rolls.

In any event I wouldn’t be reducing my hours but I would be increasing my pension contributions to take my salary down to £49k. So the government loses about £15k in tax, then there is £7k for the school place and £2k in child benefit that I would get for two children. So a £24k net loss for the government.

if only economics worked like that @hamsterno1 it’s well known in tax policy that high tax rates can lead to lower tax takes.

it really isn’t, here’s a budget of 50 hours, if x now works 10 then I hire someone to do the other 40. Not least because of the associated benefits and risks that accrue to hiring an extra worker rather than getting the same worker to do more hours.

That's not how it works in very senior roles. If I cut my hours from 5 days to 4, or even 3, to not pay 45% then they don't hire another person they just expect I'll fit it in and delegate more tasks. I went from 4 days to 5, and it works the same way in reverse - there is only one of my role globally in the company. It might be that they can hire someone else in some roles but probably not in many higher paying ones.