Thread 2: VAT on school Fees- High court challenge

[EHCPerhaps]

Following on from thread 1
https://www.mumsnet.com/talk/education/5160565-vat-on-school-fees-high-court-challenge

Background to legal challenge (not yet a case):
https://www.dailymail.co.uk/news/article-13824931/amp/Single-mother-autistic-child-launches-High-Court-challenge-Labours-private-schools-VAT-raid-claiming-violates-daughters-right-education.html

Sorry to begin a new thread, OP, but your thread filled up very quickly!

I don’t think the super rich tax resident abroad using boarding schools necessarily have a problem. The pound has been in constant decline. Most will have hard currency back up in eg Swiss francs that has increased immensely relatively speaking since 2016.

I've given you the definition of subsidy above but just ignoring that and saying there is a subsidy, when there clearly isn't, doesn't make it true.

What money is being given to me by the state to subsidise my DD's private education?

In any event, one need not travel far anymore. Ireland is doing well, and has favourable tax treatment for those who just got a legacy Irish passport and don’t have language skills.

The total cost of abolishing public school (a separate issue) would only be £1.38bn annually

You’re not even close with that figure.

“The report found that ISC-affiliated schools contributed £14.1bn to the UK economy in 2021.[11] “

lordslibrary.parliament.uk/independent-schools-proposed-vat-changes/#:~:text=Economy%20and%20public%20finances&text=The%20report%20found%20that%20ISC,gross%20value%20added%20(GVA).

We really do need to get this clear - I'm an additional rate tax payer so I clearly do subsidise state education already. I DO NOT receive any subsidy for the private education.

Sure. I used old figures - taking yours, £7000 times 600,000 we get £4.2bn, which is easily funded from treating capital gains as income, for example.

But realistically, abolishing public schools is a pipe dream, regardless of Eton and Harrow's foundational principles to educate the poor, and Winston Churchill's desire to fill public schools with bursary boys.

I'll stop diverting the thread.

Nobody can get to capital gains if a tax payer moves to a different country and becomes tax resident there. The usual exemption is immovable property only.

There comes a point where a large onslaught would lead to a mass exodus of the remaining tax payers we do have. That would have a devastating impact on public finances.

I was just thinking that if I had DCs at boarding schools and needed to fork out, then of course I would move to the Middle East for a few years, keep a flat here, save a ton of cash etc and make sure ties are not cut enough to have to pay international uni fees. So many skilled people do this kind of thing, because they can.

@DadJoke

That figure takes no account of local communities' economic dependence on private schools. Nor does it reflect shifts out of the labour market in response to very substantially reduced financial pressures on families.

And you still fail to explain what you think a subsidy is.

I think @DadJoke - you really are very deluded if you think parents who have options will just pay up happily. That is not how rich people think. They will make up the shortfall one way or another, that is how rich people stay rich. You cannot get to them.

Meanwhile, who will be trapped and stressed is the more vulnerable stretched families of children with SEN, military families, families stretching to send DCs to ballet/music schools - in the latter case, the bursaries were often based on prior financials and I have no idea who is going to make up the 20 per cent shortfall? Those on full bursaries will be fine. But those on smaller percentages may be truly stuffed.
The impact on the military, arts, sports as well as SEN is very badly thought through.
I do not think anyone on these threads thinks that the very oversubscribed highly selective public schools are going to be too negatively affected.

To get back to the Legal Challenge, I cannot wait to read the judge’s scathing indictment on failings in the state education SEN sector and the huge hurdles families have to climb through. For that alone, it is worth donating.

This. Our DC is on a bursary. And we now have to find an additional 12% for January. That is 4 pay days away. I have absolutely no idea how to do it. None.

I'm sorry to hear that, so stressful. Is that 12% of your fees or the total fees?

To @AgathaMystery

@Araminta1003

According to the ISC £1.4 billion is extracted each year (almost entirely from fees) to pay for bursaries and scholarships in ISC schools. Parents paying £100,000-120,000 p.a. for a couple of children boarding are not going to sit back and take another £20,000 on the chin.

The deal always has been that education is not taxed and in return generous support is given to those who can't afford it. If that contract is broken not only do poorer families stand to pay Vat but they also risk losing their financial support. No sane person would take that risk. DadJoke's notion that numbers will be unaffected is totally wrong.

The wealthy, by not paying for bursaries/scholarships can avoid being any worse off; and rather than being an attack on them, as with the winter fuel allowance, it will be the poorest who will suffer.

Total. Bursaries already awarded do not account for VAT. sorry for the derail.

@Marchesman - I think it depends on how bursaries are funded.

I may be wrong, but I think at Eton, they are fully funded by the external endowment which has grown to 600 million plus (and obviously makes gains years on year, subject to performance of what I assume is the equity and fixed income performance of the underlying portfolio, rents on real estate - to be honest, I am guessing). These public schools can also tap further into rich alumni who will now be incentivised to leave even more money when they die to these schools as that is free of inheritance tax and if you gift enough of a percentage of your estate to a charity (which the Eton endowment fund is) then your estate pays less tax! Which this lot will definitely do.
Labour can keep bluffing about stripping charitable status but they simply cannot do that due to the enormous and hugely significant roles charities play in our society. Essentially, they fill the state’s failures, as they have done in small SEN schools with charitable status.

Eton will probably have to give bursaries to more parents now, including middle class doctors, but as long as they are willing to ask, they should get.

As for other public schools, they will have to take more day pupils and go out and tap into their networks to get funds from alumni. All the rich will be doing everything they can to avoid inheritance tax.

Have the school said much? It must be placing huge strain on everyone in the same position.

I know this is happening due to the gov not the school, but no one will be able to find it as bursaries I assume match income.

@AgathaMystery
Sorry to hear it. I have a family member who was in a comparable situation after their parents separated and one refused to pay their half of the fees. It was solved by multiple family members contributing a small amount each, for the duration. Everybody was happy to do it because they felt they were making a big difference for comparatively little cost.

I suppose you could call it intrafamilial crowdfunding.

@Araminta1003

I am sure you are right, the richer schools are good choices if bursary support is needed. I was thinking of all of the Charity Commission accounts that I looked at in the process of choosing schools - usually fees were by far and away the main source of income.

So, yet another way that the scheme hits a poorer target.

That's a circular argument (ie nonsense).

You're saying that bread being exempt from tax isn't a subsidy because there shouldn’t be tax on bread

But education being exempt from tax is a subsidy... why? because you think there should be a tax on education? Even though no other country thinks so?

Can't you see that makes no sense?

@DadJoke - still waiting to hear what subsidy you think the state are giving private school parents.

When the state gives us £0 and we pay the £7k per year education investment our children are entitled to from the state (as well as additional education)

And again: when a subsidy is being paid, you would expect the cost to decrease when fewer people take up the subsidy.

So how does the government's cost increase when fewer children choose private school instead of state?

How do you explain that?

I've answered this already.

They are getting a subsidised luxury which should incur VAT. It will raise revenue, because the VAT will barely impact private school numbers.

If you don't like "subsidy" - you obviously feel attached to your definition - call it a tax break. If you don't like that, just think of it as a change in the VAT regime to bring a luxury item into the scope of standard VAT.

I can answer this, as we have three passports in the household and our DC are in international school in the UK (for the past seven years) - previously expats in Europe.

The majority of Brits have tapped out to cheaper PS or elsewhere, with the influx being Mid East, Indian and Asian kids.

Capital is already in flight - we have been offered a move back to Europe, which we are contemplating, going summer 2025.

The point about Labours tax policies is simply this - it mays money feel unwelcome. The direction of travel is clear.

We didn't even have this with Blair, for his other faults. So it'll be interesting to see how Starmer fares. So far, so bad.

I say interesting, more depressing

I’m afraid so EST - high tax payers go - the tax receipts are lost. It’s not a bleat - its a fact.

I am sure many posters will be happy.