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/

You can make whatever assumptions about me that you like, but they are are unlikely to be correct. As it happens, we live in a very ordinary house that came with a very average price tag, because neither DH nor I wanted a big mortgage. Indeed, this is one of the reasons why we could have comfortably afforded private in the first place, precisely because we hadn't overstretched ourselves on the mortgage.

My dc went to an excellent state primary school followed by a very average state comprehensive at secondary. Her secondary school certainly wasn't the type of school that people would buy in the catchment for, but to be honest, none of the schools in our town are. We did look at private options as well, but concluded that they weren't worth the investment for our dd, who was the type that would thrive and excel anywhere.

I don't judge other parents for using private schools. I think it's a valid choice and I might have considered it more if my dd had been lacking in confidence or less self motivated etc. However, I do see them as non-essential luxuries, and as such, it makes sense to tax them as such. I have quite a few friends with dc in private schools who agree with me, so it isn't about spite or jealousy, and I certainly have no ill will towards privately educated children. It's just a different view of what society should prioritise.

My issue is absolutely not with parents who choose to privately educate. If people have the money and they think it's a good investment, then fair enough. My issue is with the people who believe so strongly in their own sense of entitlement that they resent having to pay a bit of extra tax on the school fees. Most will be able to comfortably afford it. Those that can't will just have to accept that private school will be out of their reach, as it already is for the vast majority of families in this country anyway. I really can't see that as a tragedy.

I'd like to add - not wanting a big mortgage and having a different view to some of the ps parents on here is a valid choice, and does not mean this poster or anyone else who supports the proposed taxation is bitter or jealous, or doesn't want the best for her children, or hates privately schooled children, or doesn't want to work hard.

It's the lack of consideration for other views that is so irritating about so many of the posts by ps parents and what seems to be a bubble of believing that anyone who supports the tax must be consumed with jealousy or own expensive houses near amazing state schools.

For some people, the commitment and potential stress of having to find enough to pay school fees every year would have a serious adverse impact on family life, and they may feel they don't want their children to experience that, but to meet a wide range of people and on balance they're happier that their children are in the state system. As this poster eloquently put it, that isn't about laziness, spite or being callous about anyone else, it's just a different worldview.

Yes BUT Why is it always state vs private - yes every child deserves a good education and agree the state sector need to improve so all schools are decent BUT why is it at the detriment of the private sector? It shouldn’t be as they can co exist together. It’s not the private school sectors fault the state sector is underfunded for generations

Funding can come from elsewhere (first place the govt should be looking at is cutting their own costs, please cut all the people doing nothing from your payroll!). Having children in Private school actually reduces funding required for state schools and as multiple reports have indicated, applying VAT on private school will likely have no benefit (at the detriment of children) and definitely wont raise as much as Labour predicts (their assumption is at a very low drop out rate which is simply untrue).

They can co exists like now - it should not be a “us vs them” scenario as lots of people seem to think - the policy is a lose lose for all (except maybe the ultra rich as it will be so much easier for them to get into the good private school now with a lot less competition)

I think it is a terrible position to put a child in. If you are wealthy then send your child to whichever school you want but if you have to go without holidays, car, furniture, housing - it's a lot to put on the shoulders of a child.

The private sector is part of the issue though. Look at the current cabinet and how few of them have been to state school and how few of them send their own children to state school. They have no idea about the system they are making policies for which can only be a BAD thing. And that's before we look into how some independents (not all and not all subjects) handled the awarding of grades in lockdown.

If you can no longer afford private schooling with VAT added, you will have to accept you have left the 6% in the UK who can afford private education and joined the 94% who can't.

And in the mean time the bigger actual issue is that the government have delayed announcing teachers' pay review for next year. This now won't be announced until after the election so state schools have no idea what their pay bill will be for next year. This is after promising to get it out more promptly than previous years due to the negative effect on school budgets. Of course if they funded it there would be no problem but...

Education shouldn't be classed as a luxury. Private healthcare is VAT exempt as are things like swimming lessons etc. My DC will be going to private school with grandparents paying the fees. I know lots of other grandparents who have spent way over 200k on extensions, house renovations, holidays etc, which no one blinks an eyelid at. Same with stay at home parents - which generally costs more than school fees in lost earnings.

Whereas somehow people who use private school are put in the category of stupidly well off people who just deserve a load of hate directed at them

Haven't read the full thread so don't know if anyone has given a direct answer, but this won't work. The limited company can reclaim VAT but would have to charge you VAT, so you would still end up paying VAT. If the company doesn't charge you for the school fees, it wouldn't be able to reclaim VAT as it would not be an expense incurred for the purposes of the business.

You may be sure there is a workaround, but you are wrong. If there was a workaround, people would be using it to avoid VAT generally.

@prh47bridge people are doing tax workaround though on other stuff? And school fees are slightly different to random of things that VAT is chargeable on.

This comment and all comments supporting this comment are just plain stupid. It implies that all parents who currently have children in private schools went to a private school themselves. It’s just ignorant to think that. As a child of an immigrant mother who starved herself when we did not have enough food growing up - I am furious that you imply that after building a decent life for ourselves so we can send our child with Sen needs who struggled in a government school to a private school does not make us decent people - how dare you.
What makes people decent is their compassion and respect for others despite their differences - something you are clearly lacking.

The irony of all this envy against private school parents is the private school parents who likely did go to private school themselves and intend to continue to send their own kids to private school - are likely wealthy enough to not think too much about the increase.
And yet it’s the parents who have sacrificed and sent their Sen need child to a private school who will be affected by any increase who are getting the most grieve because they are worried about their child’s education.
I think any decent parent would understand another parents concern that they might have to disrupt their child’s education - whether it’s moving that child from a state school to another state school - or from a private school to a state school - no decent parent does that without some amount of anxiety at the change.

I honestly couldn't care less if you want to send your kids to private schools. I have plenty of friends that do the same. They are all decent people and I haven't suggested otherwise, so I suggest that you gather up your toys and pop them back in your pram.

What is not "decent" in my view is the ridiculous bleating from a small but very vocal minority of private school parents about having to pay VAT on school fees and stupid threads like this one on how they can avoid paying this tax once it's implemented. There are lots of parents in this country who can barely afford to feed their children. Be thankful that you're not in that situation.

I do feel sorry for kids who will have to move because their parents have made decisions about their schooling that they can't really afford to sustain, but I don't personally think that's a reason not to tax private school fees.

There are some taxes it is possible to avoid legally. VAT is not one of them.

I was replying to your comment of this ‘It seems that the one thing that private schools sadly cannot teach is how to be a decent person.’
Throwing insults at me such as put my toys back in my pram might help you feel superior but it really highlights the type of person you are.
Your comment about other parents not having enough money to feed their kids is ironic when I told you I was one of those kids growing up.
I don’t have ‘kids’ in private school. I have one in a brilliant government school and one with sen needs in their last year at private school. Any increases will not affect us.
But I will stand against the clear envy for the private school parents who have their sen kids in private school and will be affected by any change.

Most people in the world can't afford food / somewhere to live / healthcare, therefore you're never allowed to complain about anything ever again.

Well said.

If you suddenly had to pay 20% tax on your mortgage payments - money which the government says will be used to improve social housing - how would you feel? Would you be pissed off, and trying to see if there's a way not to pay it?

It's very, very similar:

• owning a home is a huge privilege, which not everyone can afford
• social housing is under-resourced and needs improvement
• owning housing creates a divide in society between people with that stability and those subject to rent rises and the fear of evictions their whole life. That's particularly harmful to children
• ideally everyone would have the security of owning their own home

But the nagatives to that tax(again, similarly) :

• it's a huge hit, and if you're already struggling with a mortgage it might be too much
• it's not fair that someone who earns more than you but has decided to rent instead doesn't pay
• the very richest (who have no mortgage) won't have to pay anything. It's aspirational people who have struggled to buy the first home in their family who will suffer most
• it's unlikely to raise the amount expected, because some people won't be able to afford it and will either sell their house/not buy. In fact, they'll now be eligible for the housing part of UC so the scheme may even cost the government money
• it's hugely disruptive and harmful to those people it pushes over the edge and have to sell their home

It really is very, very similar.

In both cases, the appropriate way to raise money to improve the state service is to increase general taxation. 1p increase in the basic rate of income tax would raise £5.5bn - more than 3 times as much as the very best case estimate for this tax. And it would be paid fairly by everyone who is benefiting from it.

Wrong thread!

How would you pay it via a LTD company? It's not a business expense. If you can't afford it you can't afford it, like most people...

This is a goady post. Otherwise, you are mad to post that question here.

Great, and the £6-8000 that the government spends on each pupil at state schools should therefore be given to every child at every school. You forget the saving that the independent sector provides to the state sector. The nearest state schools around me are rife with drugs and knife crime- I have no grammar schools that I am in catchment for so have little choice if I want my kids in a safe environment. We both work to pay for fees and forego holidays etc. it is the politics of envy, if you want what is fair then private schools should have access to the per pupil funding that every state school receives. This is far more than the 20% VAT which will also be offset by capital projects and VAT claims that the private school will now be entitled to make.

This is a deliberate decisive policy that has not been thought through. You are happy to deliberately displace children, so it is definitely not a policy for ALL children. I will not be doing any charity work like I currently do and will be badgering my private school and others to rescind all bursary places (which often make up 20% of places- so I am already paying for others, as well as forgoing the £6-8k a year the government provides to state schools).

New parents will be moving to areas where there are good state and grammar options- tutoring kids to get in leaving even less places for those who can’t afford tuition. Or like Keir Starmer live near a tiny catchment state school surrounded by million pound houses. Funny how he went to a private school as did many of his cabinet or send their kids to, and now he wants to demonise them, the children who attend and their parents.

I know many people moving abroad as a result of this policy and it’s something we are looking into as well.

The public will lose out with this policy- when my kids transition to state in a few years, due to this, I’ll be spending the money on holidays abroad not on this country!

🙂

thank you so much this is very helpful!