Business rates on private schools

liverpudcounsel · 2024-10-30T16:54:06+00:00

Lots of threads on VAT on private schools, which I don’t have a strong opinion on. I have not seen much information or views on business rates, which has come up on the budget today; new legislation to remove their business rates relief from April 2025 which means loss of charitable status for private schools. Anyone know much more specifically about this? Just curious. Along with the employer VAT increases, and VAT on fees is this budget going to blow a hole in the finances of these schools?

Another76543 · 30/10/2024 17:00

The business rate announcement isn’t new. At the moment, around 50% of private schools are charities. The schools which aren’t charities already pay business rates. Those that are charities receive a reduction on the amount they pay. That reduction is now going to be withdrawn. They are withdrawing the reduction, not changing charitable status.

The VAT will reduce pupil numbers, and schools will face a large cost increase because of the changes to NIC announced today. It’s going to be tough for them.

Another76543 · 30/10/2024 17:09

Just to add, business rate relief is continuing for leisure, retail and hospitality. This government thinks that a pub should be treated more favourably for business rates than schools educating our children.

Original poster

liverpudcounsel · 30/10/2024 17:13

Thank you. That makes more sense. I saw the NI employer contributions change.
They should be able to claim back some VAT through purchases though.

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Original poster

liverpudcounsel · 30/10/2024 17:14

Another76543 · 30/10/2024 17:09

Just to add, business rate relief is continuing for leisure, retail and hospitality. This government thinks that a pub should be treated more favourably for business rates than schools educating our children.

That is interesting!

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valueyourself · 30/10/2024 17:29

Another76543 · 30/10/2024 17:09

Just to add, business rate relief is continuing for leisure, retail and hospitality. This government thinks that a pub should be treated more favourably for business rates than schools educating our children.

We have schools that educate our children, that do not pay business rates. BECAUSE they are not a business . It's called state education !!

Ozanj · 30/10/2024 17:32

valueyourself · 30/10/2024 17:29

We have schools that educate our children, that do not pay business rates. BECAUSE they are not a business . It's called state education !!

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state schools pay business rates too. The government pays it on their behalf.

Another76543 · 30/10/2024 17:38

valueyourself · 30/10/2024 17:29

We have schools that educate our children, that do not pay business rates. BECAUSE they are not a business . It's called state education !!

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Private schools also educate our children (at no cost to the taxpayer - unlike the state system). There is no logic in treating pubs more favourably for tax than schools.

Original poster

liverpudcounsel · 30/10/2024 17:42

Another76543 · 30/10/2024 17:38

Private schools also educate our children (at no cost to the taxpayer - unlike the state system). There is no logic in treating pubs more favourably for tax than schools.

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I would like to see as many businesses stay healthy and afloat in this treacherous times.

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Bunnycat101 · 30/10/2024 17:57

The NI really is a massive risk to jobs. I think people were expecting a rise but not the threshold rise as well. That effectively will cost £615 per employee.

The tone of the budget re private school fees didn’t sit right with me. It was coming but there is still this implied ideological stance to the policy. What you ideally want is to raise state schools to the standards of the best private ones and not to destabilise the private sector to appease the left wing of the party.

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

Chocolatelover13 · 30/10/2024 18:18

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

Race to the bottom….. brilliant.

Another76543 · 30/10/2024 18:29

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

The general agreement though is that the state system is underfunded and on its knees. The Labour government have said this. Why are we now insisting that private schools should have to suffer in the same way? Surely we should aim to drag the bottom up, not to drag the top down.

SheilaFentiman · 30/10/2024 18:47

Private schools could so do the same - fewer TAs, larger class sizes, etc -

Well…, but smaller classes is one of the key reasons to pay for private school!

ArghhWhatNext · 30/10/2024 19:02

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

Staggeringly ignorant comment.
I have absolute sympathy with the VAT policy because I do agree that all students should be able to access manageable class sizes, excellent sports and arts facilities, outstanding teaching etc.
But this comment demonstrates absolutely how poor the understanding is of the diversity of the private education sector. Some schools have vast funds which they waste on blingy and obscenely OTT facilities.
But others are tiny and are hanging on by the skin of their teeth, underpaying their staff but providing small class sizes that meet the needs of often low-level SEN children who have failed to survive in their state schools.
The NI change is quite possibly a final straw today.

Pixie2015 · 30/10/2024 19:04

Another76543 · 30/10/2024 17:09

Just to add, business rate relief is continuing for leisure, retail and hospitality. This government thinks that a pub should be treated more favourably for business rates than schools educating our children.

So sad - will make private schools more elite and force many with special needs into mainstream

Pixie2015 · 30/10/2024 19:08

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

I don’t think they laughing - think they will be supporting the best they can - they likely increase costs to state schools that use there facilities

Icequeen01 · 30/10/2024 19:14

This is very worrying for my school which is an independent charity run SEN school for LAC children all with EHCP’s who cannot manage in classes of more than 4. What with us now having to charge VAT and now this I’m worried about our future to be honest.

Ozanj · 30/10/2024 19:17

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

Sorry to break it to you but state run Academies are run like businesses too and they also charge parents for things but as it’s organised by the pta parents fool themselves into thinking it’s free.

Ncocta · 30/10/2024 19:42

ArghhWhatNext · 30/10/2024 19:02

Staggeringly ignorant comment.
I have absolute sympathy with the VAT policy because I do agree that all students should be able to access manageable class sizes, excellent sports and arts facilities, outstanding teaching etc.
But this comment demonstrates absolutely how poor the understanding is of the diversity of the private education sector. Some schools have vast funds which they waste on blingy and obscenely OTT facilities.
But others are tiny and are hanging on by the skin of their teeth, underpaying their staff but providing small class sizes that meet the needs of often low-level SEN children who have failed to survive in their state schools.
The NI change is quite possibly a final straw today.

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The same goes for state schools - some state schools raise over £300k Per annum in donations from rich parents and have fancy facilities and state of the art equipment. Why not share that around?

Adding vat and business rates is just a race to the bottom really. The rich continue to get their fancy education (and without as much competition - win win for them + most of them have prepaid so aren’t paying any VAT whatsoever) and the “struggling to pay the fees” middle class are the ones who will now crowd out the state sector and use our tax payers money to fund their government spots.

It astonishes me all these comments that people are happy for VAT to be applied as no one benefits at all.

I agree go and tax some other industry instead or giant corporations like Google and Amazon. Educationand children’s lives is one area that shouldn’t be messed around

Setyoufree · 30/10/2024 21:23

mugglewump · 30/10/2024 18:03

State schools funding has dropped from 5% of GDP to below 4% over the past 10 years. Schools have had to make cuts and adapt. Private schools could so do the same - fewer TAs, larger class sizes, etc - and absorb the costs. But because they are businesses first, and educational establishments second, they pass all the costs on whilst lamenting the goverment. Private schools are laughing at you fee paying parents as they such up your supposed bottomless pits of money.

I don't want my school to enlarge class sizes and absorb the costs. They're not laughing at me, they're providing the service I'm paying for....

Original poster

liverpudcounsel · 30/10/2024 23:09

Icequeen01 · 30/10/2024 19:14

This is very worrying for my school which is an independent charity run SEN school for LAC children all with EHCP’s who cannot manage in classes of more than 4. What with us now having to charge VAT and now this I’m worried about our future to be honest.

There is an exemption on business rates for schools which provide solely for EHCO children. Your school should be fine

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Icequeen01 · 30/10/2024 23:27

@liverpudcounsel Thank you, that's reassuring to hear although the fact the LA's will have to find the extra funding to cover the VAT is still a worry. There doesn't seem to be an exemption for SEN schools for the VAT.

Araminta1003 · 31/10/2024 05:41

Private schools need to deal with VAT, business rates and now also the extra employer national insurance. When you couple that with parents no longer signing up, it is obvious many will go bankrupt. I hope the Government have a plan for schools full of children with SEND or the courts step in - otherwise it is going to be a disaster.

Araminta1003 · 31/10/2024 05:53

https://www.bailii.org/ew/cases/EWCA/2021/826.html

Labour have said they are imposing business rates on all private schools, including those with charitable status. How exactly that is squared with this case recently heard in the Supreme Court, I do not really understand. And whether there will be an adverse impact on other types of charities - one would hope they make sure there won’t be. However, given the impact of VAT on SEND children potentially I am not holding my breath that this will be done properly either.

PurBal · 31/10/2024 06:03

NI will have a huge effect on all employers. Private schools are particularly vulnerable because it's coming in around the same time as VAT (most schools are capping at an average of 10% so need to fill the funding gap / make cuts) and business rates. Schools have already closed. And from the impact statement they're expecting 100 schools to close over 3 years. Doesn't sound huge, but it's 25-30% increase.