Ways to avoid private school fee VAT

[tiantian1005]

Hi, not looking for a political debate but has this been discussed on how this can be avoided or recovered as in i am sure there is a workaround. Can we pay the school fee via a limited company then claim back VAT or at least claim as expense or can we do this via a trust fund/

No. Because any woman facing that choice would have already give up work.

That's the problem.

I have been going on about women (and men) at this income level having been very very hard hit since 2010 by a slew of extra tax costs. Of course no one will ever feel sorry for them but they are the ones bearing the highest tax burden in 70 years particularly if they have 9% or 15% student loan charge, whilst most people since 2010 now pay less tax. Adding the school fees charge to this group (who might be doctor/teacher like my parents or lawyer/teacher like I was etc rather than billionaires) is a huge extra burden for them when they are choosing to prioritise their children's education rather than spending the money on drugs or holidays. Anyway hopefully a legal challenge will go ahead and be successful.

Oh for goodness sake, prioritising their children's education rather than spending the money on drugs. What a ridiculous caricature of state school parents. You totally undermine the credibility of anything else you have written in your post with that nonsense.

Awful post. I've said it before but the way some private school parents talk about state school parents is horrific.
Drugs and holidays? Nope. Food and housing.

DRUGS AND HOLIDAYS what a low opinion you have of people 😮

They are obviously talking about discretionary spend not basics like food and housing, what a ridiculous response. Drugs is a low swipe, but there are plenty of parents who could choose private with some lifestyle sacrifices and decide state for various reasons (if I had a great state nearby I wouldn’t be forking out for a private school either). Neither is wrong, but one group is now being penalised via VAT for choosing an option with overall societal benefits.

@Bitingback

It's a ridiculous response to complain that someone is accusing state school parents of choosing drugs rather than private schooling?

Ok. Again, the way some private school parents talk about state school parents is horrific.

I am talking about parents who are rich enough to fund private school at £18k per child - they could spend their money on something else; instead in the EU education is regarded as a moral good and it is illegal to charge VAT on it just as since the 1500s in the UK education of any kind has been one category of charity. We should be pleased parents state or private who put effort into a child's education - these people in state schools too are heroes for choosing the best school, reading to their child etc instead of other things on which instead plenty of parents spend their money or time.

Drugs is a very low swipe. And there is no but to qualify that. It is a disgusting and ignorant comment. Full stop.

@Boater Where I live all schools have catchment areas. Irrespective of this, the schools are full. I think parents have made decisions already here.

I agree to some extent with Xenia. The parents who are working hard and building up productivity and economic growth in this country are being heavily penalised. If Labour think all this tax will promote growth, they are wrong. Vat on education is unkind to dc who have to leave school and there’s no guarantee of a place in a local school. None here!

I was commenting on the basic misunderstanding of discretionary spend, which was used to generate a comment on beleaguered state school parents choosing to spend their money on housing/food instead. I think characterising it as you did was rather patronising - there are many state school parents who could afford private (without giving up the roof over their heads) and choose not to.

I’ll also note that how posters characterise private school parents can be pretty distasteful too. These threads have been eye opening!

DH is very senior in a relevant industry / org giving advice on this (to the independent school bodies). The school your child is going to will have already created some kind of plan as to how they can minimise what they pass on. If not, they are remiss. That is where the legal avoidance will come in.

Rachael Reeves has already made it clear in her announcement that pre-payments up to the 29th of July will be accepted. obviously the problem being that none of us knew that was going to be the case and now it’s too late to take advantage of that loophole. If indeed anyone had that amount of money lying around to make prepayment.

In the end, PS school parents are going to need to suck this one up.

@Bitingback

Eye opening is the word.

There was no mention at all of drugs being a discretionary spend. You have assumed that that was what the poster meant.

I personally couldn't care less about the vat. I don't agree with private schooling anyway.

This is actually wrong and one of those classic misunderstandings people have. Yes, they pay very little corporation tax because they are incorporated in Luxembourg I believe. But in the UK they pay millions upon millions in employee taxes and operational taxes.

In the future, will employers be able to treat school fees as a benefit in kind and set off the VAT against their own? If employers won’t do the job without it, or not do the job in eg London?
Private schooling is currently an open competitive market with lots of individual players. What if they all become a big unit together in eg London and feed into banks, tech firms and law firms etc primarily. Is that what we want?

It is what you have in some other international cities. Big corporates with international staff recommending certain schools and close partnerships between the two. It already happens somewhat in private health care.

I think you have just proved my point about the nastiness on these threads about private schools, thank you. It also begs the question why you are on this thread?

I really don’t think the poster was meaning medicinal drugs, so of course it was discretionary spend, that was the point being made. Why else were you riled by it?

this already happens outside of london

Yes @Ozanj - but it is a technical VAT set off question. A law firm has to charge VAT to its clients and then sets off the VAT it pays out itself. So can it set off the VAT it ends up paying for its eg solicitors to pay for private school fees plus VAT, if they cannot recruit those highly skilled specialists without doing so?
Even the private healthcare is offered and paid for so you get back to work quicker. We have both a dental and GP plan as well as general medical so we do not waste time going to the GP and get back to work sooner. If private school helps childcare and us not cutting down the hours so we have to drive our kids to eg after school cello and rugby, then surely there is an argument for doing just that.

And the reason I am interested in this now is because if accountants/lawyers/bankers/equity analysts/fund managers etc end up having their VAT paid but eg consultant doctors don’t, it makes a mockery of the whole thing for the rest of society.

Definitely- I work in the city as a lawyer and have a long commute - we're so reliant on after school care till late etc that we'd struggle to both do what we do without it. I can see it being a benefit in years to come but will probably take a while.

If your rent or mortgage went up by 20% tomorrow would you be expected to suck it up quietly?

Ridiculous that people are apparently not "decent" because the government has decided to go against the whole of the EU and every developed country to tax education, while framing it as a "loophole".

Fair enough if introduced for new joiners from 2025, but to implement half way through a school year is ridiculous

Well, I'm lucky enough to have paid my mortgage off but for a lot of people, rent or mortgage is an essential cost that they can't really avoid. We all need to live somewhere, and of course I would understand people being very upset if they were suddenly going to be made homeless or have to move into totally unsuitable accommodation. I wouldn't see it as being the end of the world if they simply had to downsize from a naice house to a slightly less naice house.

Private school fees are an optional choice that is available for those that can afford it. If you can no longer afford it, then that's a shame but it isn't comparable to someone at risk of losing their home.

@ExasperatedManager that really depends on whether you live in an area with decent or failing schools. If the choice is a school with a 20% GCSE pass rate, I can see why it is essential for some parents

It's bizarre that there isn't more focus on the huge disparity that exists between state schools and the fact that many are failing.

Like you, truthfully it doesn't affect me because the VAT doesn't really make a huge difference, but the whole debate is just bizarre when like private healthcare we should be thrilled people aren't costing the government money and that extra money should be used to improve education for those in many of the failing state schools the U.K. has.

I absolutely agree that we need to tackle inequalities within the state sector. For me, this should have been a higher priority than VAT on private schools but I'm not in charge.

However, I really wonder how many people with kids in private schools truly live in areas where state education is genuinely so poor that kids with engaged and supportive parents couldn't do well, and of those, how many truly couldn't move to somewhere with better options if they weren't paying out on school fees. I suspect that the number will be vanishingly small.

I am sure that there will be lots of private school parents who don't have access to an outstanding state school or a grammar school or whatever, but that is not the same thing at all.

@ExasperatedManager I can name at least 5 boroughs in London for one that this would definitely apply to!

Anyway doesn't really affect me personally but just a shame that it's another example of the country getting worse and making one of its strongest sectors from a global perspective worse and less competitive