Business rates on private schools

[liverpudcounsel]

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?

I wish that were true, but many of the big school trusts have CEs and COOs earning over half a million a year. These schools - which are state schools - operate as a business, and not all operate with the customer/consumer as the focus!

Private schools should be treated like the businesses they are. The fact that some might struggle to do that isn't justification to give them special treatment.

Lots of private schools are not full of SEN children though.

Except they aren't business in the sense of Tesco is a business. They don't have shareholders and most are not for profit so any profit has to be put back into the school.
They already pay tax and VAT to the tune of over £5 billion per year.
This is a tax on parents not schools. Parents who already pay their taxes which fund state schools ie your kids.

Indy sector saves the state over £4 billion per year and each child who leaves indy for state costs the taxpayer £7-8K per year.
The indy sector saves the state the cost of supporting over 100,000 kids with SEN each year. Given the current crisis in state SEN the sector just couldn't cope if those kids left their Indy schools.
It is a matter if principle that no European country taxes education, indeed European press can't believe that Labour are doing this.
Labour are prioritising taxing education over increasing duty on vapes! Disgusting.

Rather than parroting Labour misinformation maybe actually understand the issue at hand.

I found how Rachel Reeves announced the VAT change in the Budget interesting. She's obviously realised this will be a loss to the taxpayer rather than a gain, so lumped the announcement in with "tax evasion" and said combined that would raise £9 billion. What she probably meant was tackling tax evasion would raise £10 billion but adding VAT to schools would cost £1billion. Hence the figure of £9billion.

It's fairly obvious this would be the result. Currently a percentage of children are being educated for free (from the perspective of the tax payer) and now that will change simply for spiteful idealogical reasons. Pathetic.

Exactly

What’s particularly tricky is that schools have already had to commit to parents to raising fees by x amount from Jan BEFORE they new about the NI rise, so they will have to fund that by reducing costs as they can’t increase fees further. But most schools have already reduced costs as much as they can - staffing is by far the biggest cost.
Theyve (Labour) been deliberately misleading about IHT on farms - saying it is only affecting a very small number of farms (500, they’ve said) is based on the number PER YEAR- ie how many farm owners die a year, so if you looked at it over 10 years it would actually be 5000 (and that’s a massive proportion of farms). And it affects far more than that because of course the farmers don’t know when they will die meaning that all their kids and grandkids now face uncertainty.

The figures they use also erroneously include the sale of individual fields.

It doesn't matter whether or not you regard private schools as businesses - and very many obviously are not businesses because their purpose is to educate children rather than to make a profit by educating children.

VAT is paid by the consumer on top of the cost of a product or service. It isn't charged on the profits (if any) of the product or service provider.

The effect of VAT is therefore to make products and services more expensive, limiting their availability to those who can afford to pay the tax on top of the base cost and limiting the viability of affected providers.

The only explanation for imposing such limitations on a merit good like education is naked ideology

It wasn’t always going to happen, it was mooted as a policy but only firmed up before the election. Schooling happens in a minimum of 4-5 year blocks. One terms notice is not enough to replan a child’s education. In the state sector you get 3-6 options to apply for in reception/secondary, expecting children leaving private school to just go where there is a space feels like a petty punishment for having gone private in the first place.

For transparency I do see private schooling as luxury product. I sympathise with parents who scrimp and save to send their children but that doesn’t alter the fact other parents can’t afford to do the same for their children. So it is disingenuous to say it’s not a privilege to be able to access the money to pay for it (I don’t care how many coffees/holidays/cars you forgo).

So I guess I don’t have a problem with VAT. I do have a problem with how much VAT is generally, and that the temporary rise to 20% post covid doesn’t seem to be very temporary! If Labour had added a special rate to schools, say 5% VAT, this would have been more palatable, left room for further rate rises in the future, and probably brought in more cash as there wouldn’t have been a mass exodus.
But they didn’t do this and I therefore see this VAT as nothing more than a vindictive class warfare that they are pushing through ASAP to do maximum and irreversible damage to the sector while they are in power.

As a supporter of responsible government spending (or should that be ‘I dream of a day this will happen’) and freedom of choice to spend your money on what you want, without being made to feel guilty that you have money and someone else doesn’t, I hope the independent schools are successful in legally challenging them on this.

That should be quarter of a million (hope I haven’t just posted a self fulling prophecy!)

I don’t think it’s quite the case that loads of kids with SEN are in private sector, I have taught several kids with SEN whose non-disabled siblings were at expensive private schools that wouldn’t cater for intellectual disabilities. My own son has mild learning difficulties and we found only on school locally that were not selective and they said he was at the lower end of the students they take as his reading was a year behind his peers. Meanwhile in state I’m teaching phonics to secondary school students who are in classes of 25-30 in their mainstream subjects. My son’s class sizes are between 15 and 3. There absolutely needs to be more funding in state, as well as curriculum reform in KS4, private education is a luxury item. State should be much better.

Certainly in London a lot of the large educations trusts, that are hoovering up struggling private schools, have shareholders and are very much a business. They pay business rates but should these businesses (mainly owned by off-shore investors) be benefiting from zero VAT to boost their profit?
This is what happens when you allow UK assets to be sold to overseas investors. We pay, they profit.

There's nothing I didn't already know in this reply.
You've made some assumptions though.
Standard private school parent response, assuming superiority when there is none.

Again, no new information here.

@ArghhWhatNext

Do you honestly think that private schools are the only ones to have outstanding teaching? I can assure you that you're wrong.

Obviously teaching is much easier with plenty of support, a small class and unlimited resources.

There's plenty of outstanding teachers in state schools.

I agree with this other than education being a luxury product.

Plenty of unqualified teachers teaching in the private sector too.

Agree 💯 that the USP of privates is smaller class sizes. It is simply not possible for a state school teacher to give the same level of individual attention in a class of 25-30 that a private school teacher can give to a class of 8-12.
That is why privates get better A level results but these students then struggle, more than state educated students, at university.

All of you who support VAT on school fees you realise we will be only country in Europe to tax education? It is an agreed point of principle across Europe (and indeed much of the world) that education is zero rated.
Labour are going against this point of principle for absolutely no financial benefit.
It is an economically flawed policy delivery no net gain yet jeopardising the education of many kids.

I support businesses being treated like businesses.
I support businesses not pretending to be charities.

Lots are though - I moved my son into private about 18 months ago - the vast majority of his friends have some SEN

Plenty of unqualified teachers teaching in the private sector too.

There are plenty of unqualified teachers in the state sector. There are also “qualified” teachers who end up teaching a specialist subject which they have no experience of.

https://schoolsweek.co.uk/extent-of-classes-taught-by-non-specialist-teachers-revealed/

I’d choose my children being taught engineering or physics by someone who has worked in that field, has industry knowledge and expertise, than a “qualified” PE teacher having a bash at teaching those subjects.

I'm fairly sure the average private school child does not struggle at university or no more so than their state school counterparts.

For the millionth time, the tax isn't on schools it is on parents.
Indy schools already pay tax + VAT to the tune of over £5 billion per year.
So the rest of Europe has got it wrong and Labour are right?

So what? There are countries that ban private schooling. Should they be attacked for being the only country to do so and condemned for a lack of choice. The argument may be that they have great state schools but if standards drop in the future then there is no alternative, no choice. Isn’t that worse than adding VAT?