VAT on private fees questions (sorry!)

[cloudsblue]

I know this has been discussed a LOT on here of late, and the conversations can get fraught...but I have two quite simple questions that I was hoping someone might be able to answer -

a) When are schools likely to add on the VAT? Ours has already said they'll invoice for next term in early July before the election. The the new government will have to do the budget in October and presumably there will be a fair amount of admin to implement everything following that. So what are we thinking? I know Labour is saying they'll do it 'as soon as possible' - but when is this likely actually be?

b) Fees in advance. For all the talk of 'anti forestalling' to prevent parents trying to dodge VAT this way, how realistic is that? BTW I am not in a position to do this myself (sadly!) but I honestly cannot see that the new government is going to be able to start claiming VAT on fees that are already paid for? Wouldn't that mean sniffing around in each individual school's accounting to work out if this had been done? Am I missing something here?!

thanks so much

Ask your school, they will have plans in place of what will happen and when. Private schools have been planning for this. Local private schools have sent out information

@cloudsblue
Unfortunately no one know the answers - schools or parents. No one has had enough information provided by the Labour Party. With regard to prepayment of fees, the answer probably depends on how the school structures pre payments. Some schools have stopped allowing pre payments altogether, some allow prepayments, and others allow prepayments into a fund which is then billed termly going forwards (I can’t see how the latter could work in avoiding the fees). I’d be wary of a school claiming to know how the policy is going to be implemented.

@Doublethecuddles and @Another76543 - thanks so much. Our school has tried to provide as much info as they can but they can't be categorical about anything it seems, even if pre-payment of fees could help avoid the VAT! I think they are trying to cover their backs as much as possible, understandably...

At least they're not upping the fees reactively already, which I've seen some schools doing.

Still, I'd be really curious if anyone has a view as to when this will come in. It seems that most people think putting VAT on fees from the very moment they get into power will be pretty much impossible....so I wonder when it's likely to happen?

I'd suggest not before 25/26 simply because of available parliamentary time. I'd also expect charges to be applied to invoices relating to teaching from say Sep 25, so invoicing early won't be a loophole.

Not connected to your question OP - sorry - but if the schools become registered for VAT, won't that mean that they will be able to reclaim VAT on a load of costs that they wouldn't have been able to previously? Stationery, building maintenance, groundworks etc.

Yes but majority of costs are staff costs with no VAT. But the things you mention they would be able to reclaim VAT on which they currently can't.

@cloudsblue

At least they're not upping the fees reactively already, which I've seen some schools doing.

Are you sure those schools are increasing fees because of the expected VAT change? Or are the increases just the normal inflation+? I'm under the impression that, if and when VAT becomes due on private school tuition, they'll have to invoice you for 20% above whatever their ex-VAT fees are. But I'm also under the impression that most private schools are expected to drop their ex-VAT fees by perhaps 5% at that point because of the VAT they'll be able to reclaim on their expenses.

Our school issued updated guidance about a week ago saying that they continue to expect introduction no sooner than 2025/2026 school year.

@Labraradabrador - do you think not until autumn 2025 then? X

I would plan financially that fees for autumn 2025 onwards will be subject to VAT.

I wouldn’t be surprised if it is delayed or watered down, but I would rather be prepared.

Our school have sent a letter out saying they just don't know. They have offered to allow parents to pay next year's fees before the election, but can't guarantee that will prevent it being changed retrospectively.

The school has offered to pay now for 2024-25, while they say they believe the VAT will take extensive legistrations and won't implement soon. I believe it will also depend on how everything goes for the first few months after the election. The more other burning issues (which has been already ongoing unforturnately) the higher chance this policy will be delayed or watered down.

Most private schools (between four kids I have experience of six) invoice for the following term as soon as the current one is over. As you have to give a terms notice to withdraw, I imagine, should the (possible) new government implement the VAT (which I have my doubts due to EU laws) they'd have to give plenty of warning.
I've heard a 15% increase most likely due to reclaiming on some aspects, but as school fees go up every year anyway it may well be 20% onwards.
I imagine school year 25-26 earliest.