VAT from Jan 2025

[Zizzagaaaaaww]

Just in case you haven't heard.
VAT will be applied to private school fees from Jan 2025

Also advanced payments will also be taxed

If this only applies to schools and not pre schools, universities, and other private vocational and sports training businesses then surely the private schools can just rename themselves as something without the work school in it and then also continue to be exempt from vat.

Private schools must register with the government, whereas I’m presuming sports clubs don’t.

It's so sad for the smaller independent schools. My dd's school have made the kitchen staff redundant already, and won't offer lunch any longer.

As an aside, I'd give my right arm for my dd to be able to go to the local state school, for free, and save me a huge commute, but they can't meet her needs.

That is the plan but it has not got the approval to go yet. There are plans of legally challenging it. Hopefully this gets shelved in the next few months.

What approval is needed?

It was in the manifesto in which Labour were elected. The legislation will pass.

I suggest people check what happened when Greece tried to add VAT to private schools in 2015.

The OBR needs to check Labour's figures to ensure that the policy is being made on the basis of sound financial modelling (eg around predicted numbers leaving the private sector and now needing to have their education paid for by the taxpayer, thus off-setting the VAT income raised). Labour have committed to this. Also, there may or may not be one or more legal challenges.

Do you always post on threads you aren't interested in. Of course there will be threads, it's in the news, if you don't like it just ignore it. There are vast swathes of MN I ignore as I am not interested but I don't go on each thread moaning about it

This makes no sense. VAT on two terms of fees for one kid (given you can keep one kid in for the rest of the year, this is all you have to find in order to afford it) has got to be an absolute maximum of £1600 surely? And you can’t find that, despite having enough money to have two kids in private school? You could easily have an unexpected bill bigger than that at any time - car/boiler/roof - were you really sailing that close to the wind?

vat on two terms of fees is more than £1600 for most. School fees here are just under £20k so that’s £4k of vat out of taxed income per annum. You have to earn just under £7k gross to fund that. For two terms it’s circa £2700 extra for which you have to earn circa an extra £4500 gross.

this is for a regional independent secondary school. Public schools are significantly more expensive

And it’s silly to say you could have an unexpected bill at any time. That doesn’t change just because vat in school fees is now a factor. That family still needs the boiler breakdown buffer

It looks like it's going to be more than that. They're saying VAT on EVERYTHING educational. So if you send your daughter to a dance class at the school on a Saturday or Friday afternoon, that will have 20% added also, as far as I understand. Looks like breakfast club/afterschool is still exempt. You can pay those through tax free childcare.

Who’s they?

The changes apply to Private Schools providing full time education not Saturday clubs, ballet classes etc

The wording implies that if your child is enrolled at the school, and you send them for an extracurricular at the school (which is common) you will now have to pay VAT on that extracurricular.

On the SEN front, the LA will pay VAT and then be able to reclaim it for those with an ehcp where an independent school is named in the ehcp. I am a bit surprised that the charity special schools have been included in the scope of vat. They simetimes do have idenpendently funded pupils too.

It would be interesting to know stats on those already moving their children/giving notice although I wonder if people thought they would wait until the 25/26 school year.

Anyone who can't afford this will need to give notice now however I expect the wider fall out will be from Sept 2025. It would also be interesting to see how schools handle this as they will surely write to parents now to outline how fees will be impacted, there will be ways to mitigate the increase. I haven't seen anything about the increased bill to the treasury for all the Forces children places either.

I wonder how this will affect bursaries etc meaning less opportunities, evidently 1 in 3 of our current Olympic squad were from private schools and had bursaries or scholarships.

From the government paper just published:

" what is being supplied, and whether those supplies are considered to be education. For VAT purposes, education means a course, lesson, instruction, or study in any subject (whether or not that subject is normally taught in schools, colleges, or universities), regardless of where and when it takes place. As well as academic subjects, this includes activities such as performing arts, physical training, sports, and arts & crafts. "

'regardless of where and when it takes place'. So, includes Saturday?

Won't stop them making the argument, though. Apparently, because your mortgage, heating bills, food bills and maintenance bills have all gone up over the past few years, then you MUST have thousands of pounds extra for VAT that you're just too selfish to hand over.

Interesting my school have been saying this

“Under current VAT regulations, any VAT liability is calculated at the earlier of either the invoice date or the date the cash is received”

i.e. that because fees are invoiced in July for the 2024/5 year, they would be expected to fall into the current VAT rules.

I assume point 1.9 negates that by referencing “pertaining to the term starting in January”.

Something else to bear in mind is it'll only be a matter of time before they also P11d/Benefit in kind the living daylights out of private school teachers who derive a staff discount from sending their children to the same school.

IMO, this falls under the same questionable tax status as the fees.

So, let's say you're paid £40,000 annually but obtain a 50% discount on sending two children to your £20,000 pa school, the total discount will be £20,000. Put that into a p11d calculation and HMRC will be chasing you for an additional £6000 every year. Ouch!

No, we weren't sailing that close to the wind, but the extra savings over those two terms mean the difference between being able to see through GCSE years for the eldest or not. True crunch point comes in April 2026, at which point we would start to permanently go into the red. It therefore makes sense to move one or both now, or at least plan for that from next September, as otherwise we would be sailing very close to the wind at a critical time and having to move our eldest midway through GCSEs. As such we probably will see through the current academic year, but PS for two is now no longer viable for the long haul and their education will be disrupted.