VAT on private school fees - ITS NOT ACTUALLY LAW THOUGH?

[BellesAndGraces]

Why is nobody reporting on the fact that the Finance Bill has still not been to the House of Lords or even been debated yet? All the reporting, eg in The Times, just says that VAT will be payable on school fees from 1st Jan but misses out the fact that this is not yet law - surely this is a key piece of information. Am I missing something??

You should be angry about the UK being the only Country in the western world to tax any form of education. And it may well be the thin end of the wedge, University fees would look like fair game after all it's only a minority of children that can afford to go to university these days, because they have to take out huge loans, unless their parents can pay.

How do I know that VAT on University fees won't happen? Please explain.

The top 1% of tax payers pay 30% of income tax.

Their work likewise makes a disproportionate contribution to UK productivity and GDP.

How do I know that VAT on University fees won't happen? Please explain

Because the initial cost to the Treasury would be enormous. Remember where fees are sourced from....

I'm sure that the party that brought in huge smoke and mirrors plans changes like PFI can find some way to make it happen.

I think it’s likely to be repealed, turn out to be a ludicrous waste of time and money. Not to mention unnecessary pain for thousands of children and adults,

‘The only real-world example of a country latterly introducing VAT to private schools is Greece, which imposed a 23 per cent tax on school fees in 2015, only to later roll it back following the closure of smaller schools and pressure building up on the state sector.’

As has been mentioned before, this is reminiscent of the removal of deductions on mortgage interest for landlords. Lots of cheering until people realise that the extra cost will be paid by them.

Here we're going to see increased numbers of kids in State, and increased SEN kids who haven't been formally EHCPed. So your classroom sizes are going to get larger and more disrupted, all for an ideological policy which has a good chance of not even breaking even in terms of cash raised. Everyone's a winnah!

Isn't it something like less than one extra child per school on average that is forecast to add to a school? So minimal impact on a state system with falling numbers?

Either way, as has been discussed on multiple threads, the vast majority of people are either in favour of this policy or totally unbothered either way. I can't see any rioting happening any time soon.

Oh, I don't expect any rioting either, we'll just carry on making everything worse for everyone. In my kid's school 10% of her year are leaving (including mine).

I'm sure that the party that brought in huge smoke and mirrors plans changes like PFI can find some way to make it happen.

How can the upfront cost to the Treasury be avoided then?

Adding VAT to the school fees of a small minority of children is hardly making everything worse for everyone!

I refer the right honourable Schrute to my post above.

Yes we are choosing not to pay the VAT. Most of DD’s friends are going to the grammar now so she might as well go too. I won’t need the long school days as I won’t be working long hours as a higher rate tax payer anymore. Most of my wage went on paying the school fees so I will actually be slightly better off. Had this policy not happened then most of the children would have carried on into the private secondary and not cost the tax payers a penny.

it is the principle for us. Watching a corrupt government throw crumbs like this VAT to the baying mobs and listening to all the vile insults hurled our way has been the end of things to me. I will now contribute to society as little as possible and we will pay for what we need such as private healthcare etc.

And some people really are thick….saying that once VAT is introduced private school parents won’t be getting benefits!?!!! We are literally saving the taxpayer millions of pounds every year as the state pays nothing to educate our children. Most countries actually give tax rebates for educating privately as they are doing the state a favour. I’m absolutely looking forward to the shitshow over the rest of the year as more children leave private, don’t start in Septembe and smaller private schools go bust. One near us is on the brink so that will be 150 school places to find in the local area which has about 20 spare places. Plus many of these children have SEN. Good luck with that!’

Just lol at the idea that this is the most controversial tax change since 1911.

Both of which are symptoms of the massive imbalance in earnings and productivity reward in the economy. The business owner complaining that they pay far more in tax than the minimum wage workforce they employ has the means to rectify the issue within their control.

Really? It affects around 6% of kids. Probably about 2% of households. You live in a very tiny little bubble

To be fair it is pretty controversial as we are now one of the very few countries that tax education. It’s also illegal in the EU to tax education so this will be one of the first things that we have done that goes directly against EU legislation when Starmer has always said that he wants to get closer to the EU. It’s also a bit on human rights dodgy ground which hopefully the upcoming court cases will show.

Sadly it isn't the most important area of divergence from the EU at all.

Of course I realise that a tiny number of upper class children in the UK are far more important than the planet to some people but.

https://www.theguardian.com/environment/2024/jan/19/brexit-divergence-from-eu-destroying-vital-environmental-protections

Weirdly we’ve received our invoice for fees, it has a VAT number, but doesn’t breakdown the amount of VAT being charged. Very odd, we’ve queried, as we would with any shifty looking 6k invoice.

No, they're symptoms of different people having different capabilities, and capitalism incentivising individuals to contribute in the most effective way they are personally capable of.

A surgeon might well enjoy gardening, but capitalism incentivised her not to work at a garden centre 35 hours/week, but instead put in the 5 years of tough medical school study, 4 years of 100-hour weeks as a junior doctor, and a careers-worth of life-and-death responsibility (with the possibility of being personally sued).

Someone working at the garden centre might like to be a surgeon, but not have the academic ability and dexterity required. Or might not be willing to put in the hours of study and practice needed to learn how to do it to the level we expect.

If capitalism didn't work the way it does, we either wouldn't have enough surgeons, or else they would be lower skilled - as the reward wouldn't be there to draw the most capable candidates and give them the motivation to put in the very hard work required.

Or comparing different employees salaries within a business:

• if one NMW worker contributed significantly more to the success of the business than another, then the business owner would offer them a higher salary in order to get/keep the more productive employee rather than the less productive one

• if a higher salary worker could be replaced by a NMW worker without a loss of productivity, the business owner would do it.

If you think about it, somone with a higher salary job must be producing more extra value for the business than the difference in the salaries. Otherwise the business would just employ the lower salary employee to do the job and accept the drop in productivity. The company would still be better off net, ie <value produced> - <salary paid to produce it>

Can you explain the relevance of this statement?

Finance bills don’t go the HoL

You said that the effect of people changing their work and economic patterns would be 'minimal', since it would be only 1% of tax payers changing their behaviour.

I'm pointing out that the effect will not be proportional to the number of people.

Only about half of the top 1% of tax payers send their kids to private school - so it's not as stark as 30% - but it's still significantly skewed.

It might average at one child per school but in reality it obviously won’t be distributed like that. Schools in London and much of the South East are fit to bursting, I hear Edinburgh is similar with a very high % of kids in indies.

VAT policy has nudged us into an international move we’d been on the fence about. Spend an extra £15k in fees here or have our fees paid for us abroad became a no brainer.