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?

But Labour announced it isn't coming in this Sept

Our schools have said they can’t guarantee that paying upfront won’t avoid VAT as it might be charged at point of sale/use hence you still end up with a bill.

Advice we've had is that paying pre election they think will be safe...what a mess.

Oh it is clear the risk is on the fee payer's side, that much is certain.

“Our schools have said they can’t guarantee that paying upfront won’t avoid VAT as it might be charged at point of sale/use hence you still end up with a bill.“

So there is the political will to change the entire premise of the VAT system just to get at a few private school parents?

What exactly is this going to cost us in terms of international confidence in business investment in the UK if they think they can reinvent the whole wheel and retrospectively charge people a tax? What next? Can they do the same to businesses? Retrospective VAT at 25%? After the payer may have bounced?

Fascinating, because time and again on here the fact they are charitable institutions has been used towards make a case against the tax

It's on the front of tomorrow's papers, a quote from Labour that it will be in the first budget but won't come into effect until 2025.

There are things we can all do about it. They are charitable organisations but the reality is that the part of the endowment that is paying for these charity often don’t go as far anymore. That’s why you have fund-raising activities for the bursary. We can all start by stopping to contribute to these activities.

Are you really encouraging people to stop contributing to bursaries? Is this the class warfare you are talking about? Fighting against fellow students on assisted places. Wow.

It's quite a revealing thread isn't it...

No, that would be Labour.

Schools will still use endowed funds to provide bursaries but they often top these up with unrestricted funds i.e other parents fees and I imagine in order to keep fee increases down there will be (much) less of these funds used.

Agreed. Not vindictiveness, just natural consequences.

Well over half are so.
Plus VAT has nothing to do with charitable status

No one is saying this. It is a natural result of the policy. The money for bursaries comes out of surplus from fees (unless a school is ultra wealthy either endowments eg Eton but most aren't in that position). Schools have been told by Labour to make cuts therefore bursaries are a natural victim of cuts as it saves cutting teaching or support staff.

VAT may not, but the Charity Commission is very clear about what these schools with charitable status have to do to show they are delivering a public benefit (an essential requirement). And it has long been settled law that just educating children isn't enough, they need to open up their facilities to the community/provide bursaries etc.

No, it hasn't.

It has been people arguing for the policy who have conflated charitable status and VAT. Despite it being explained time and again.

So one more time:
1.Private schools aren't exempt from VAT due to charitable status
2.Many private schools are not charities
3.They are exempt from VAT because they provide education
4.Taxing education isn't allowed in the EU
5.Greece tried it a while ago and it was a disaster

If 10% fewer children go to private school because of this policy (including new starters, not only current students) this policy will cost the government money, not raise it.

(which surely puts to bed the ridiculous idea that the state is subsidising private schools. All that extra tax from 90% of private school parents would be wiped out by the 10% moving to state. That shows how much private school parents already subsidise the state)

I suppose we'll see how it all plays out with the stick of VAT gone.

You've obviously missed all the posts where some people appealed to us to remember that these schools are all charities.

I am well aware of the difference between VAT and charitable status, I spent years advising on these issues

But those with charitable status can't just stop giving bursaries /withdraw community provision and that is the point I was making.

And my kids go to private school and I don't actually know anyone planning to withdraw the children as a result of this possible rule change (which I still feel is fraught with complexities and therefore won't happen for a while or may not happen at all)

Charitable status is separate from VAT and the charity law on this point is well established

I probably haven't seen all the threads, there have been quite a lot.

Some of the ones I've seen have mentioned the impact on kids with SEN who have been failed by state schools and who are more likely than the average private school child to be affected by this since their parents may already be pushing themselves to afford fees as a last resort for their child.

Others have pointed out that education is a social good, and that reducing education in our population (whoever pays for it) damages the country's future.

I haven't seen any saying that charity status per se is the reason to avoid the policy. That wouldn't really make sense. Perhaps you're misremembering it and conflating with those points.

Other threads again have pointed out that the policy makes no fiscal sense. That the IFS article it's based in is back-of-a-beermat at best, and more comprehensive analysis shows it's unlikely to make any money, will bring high social harm, and is overall a shit policy.

Of course, I am misremembering and your memory is perfect. That must be the explanation. Thank you for putting me straight.

Charity law doesn't spell out exactly what's required - how could it? It talks in general terms like 'public benefit'.

Schools decide exactly what to do, how much they need to give to be sure of staying on the right side of that, depending on the possible consequences.

Labour has changed that landscape. They've burned a lot of their leverage with this policy.

Policy change has consequences - often unintended. How could you think this wouldn't?

Education is itself a public benefit.

This is being ignored and instead it seems people consider education purely as a tool for equality. We see it in political slogans like ‘closing the gap’ which suggest that everyone receiving an equally poor education would be an acceptable outcome.

I've spent years working in that area. There is heaps of case law and guidance on what constitutes public benefit.

My kids go to private school, but I don't get all the doom mongers. I don't know anyone planning to move their children