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??

Poor old New Zealand, always forgotten when it comes to the ’nobody taxes education’ argument.

And 35.8% of UK 18 yr olds went on to higher education in 2023, just below the 38.2% peak in 2021. Given that figure was 24.7% in 2006 and 30.7% in 2015, it doesn’t seem that fees / loans have been that much of a deterrent.

The bigger concern is that fewer international students are coming due to Brexit and changes in visa conditions.

The top 1% of taxpayers are unlikely to be deterred by VAT.

NZ taxes education not out of spite like Labour, but because the schools fall under the umbrella of taxation the way they are set up.

The NZ govt. then offers all privately educated children a subsidy for going private.

So, yes they do tax them as they tax other organisations, but then they see the benefits of sending a child private, and give them a subsidy.

Its not the same

Top 1% in UK is about £180,000+ salary. Which is £106k after tax. If that’s your solo income, you probably can’t afford private school fees full stop if you have 2 kids. Many of those people won’t be able to find thousands of pounds of net income at very little notice.

This sounds like a good win for you and your high flying kids.
We're not as wealthy as you but I've been able to enjoy part time work for my whole kids' education. It's really nice.
I'm not in favour of people offshoring tax but so long as you are doing something legal, that's up to you, and your own moral code.

It’s a minimal ‘subsidy’ though - £500 for primary and £1k for secondary.

And it’s still GST on education, so really not that different.

Many of these posts are so self-absorbed.

No, it won’t be repealed. No, it won’t ’lead to’ tax on university education. No, it won’t cause havoc in the state system.

These are wish lists^ - howls of pain and rage from parents who think their children should go to a better school than other people’s children.

The policy is popular. And all these pushy parents will make the state sector a better place.

Well in you were suddenly required to
find an extra £5k per year per child or take them out of the school that they are happy and settled in, not knowing what state school they are going to end up in or how long they are going to be out of education, I think you might be a teeny weeny bit cross.

Solipsistic even. Funny isn’t it, that people care the most about themselves and their children. Almost like something called.. human nature. Most animals too.

My children are at private school. Have been at private school a while. Will stay at private school.

>’The policy is popular. And all these pushy parents will make the state sector a better place.’ If you say so Bridget. Bit of an insult to all concerned but that’s never stopped Labours startling incompetence.

As a pushy parent with children in the state sector, this is no insult at all.

But it wasn’t sudden? VAT on school fees has been trailed for years and years.

I totally understand why people who are affected by the policy really care about it.

What I find bloody ridiculous though is the total lack of perspective from some - it isn't the most important controversial issue of our times and people should be able to understand that what is important to them and their friends isn't the most important issue to everyone

@IWantToGetOffHelp how is the government corrupt and who are the baying mobs? Are they the majority of the population who either don't care or who agree with the VAT on private schools?

At £5k per child, you'd already have been paying £25k/year, so yes I'd be cross that my child's school was charging that much. How much was it ten years ago? £15k or less?

Where are you getting your percentages? I've never heard of anything with 90% agreement so very much doubt this is based on any fact.

£18k 10 years ago. So accounting for inflation it should be £24,334 now. In fact, my DC’s school has always increased at inflation or lower except for the last couple of years due to increased costs in power and the massive increase in TPS contributions.

I think they mean that VAT on private school fees is going to be a good thing, because it only affects the wealthiest in society and they're the most motivated to work harder, earn more, and pay more tax. So putting VAT on private schooling will just motivate those parents to work harder.

Really? Bridget saying that pushy private school parents moving to state school will make the state schools better, isn’t insulting to state school parents? Fair enough!!

Fwiw saying ‘state schools’ is a bit misleading. Grammar ‘state’ schools and the best state schools in wealthiest areas, are more like private schools. Certainly nothing like shitty non selective inner city comprehensives. But of course the government would never say that - especially when Labour politicians use the best state schools (as well as private schools). See Blair, starmer etc etc. gross hypocrisy but nothing new there.

shitty non-selective inner city conprehensives

and there we have it. Some people just can't help showing themselves.

Incidentally, both Starmer's kids go to schools that you would describe in this way, so not sure what hypocrisy you're talking about there.

Controversial or not it was the cherry on top for us. The taxes and bills in this country are now financial abuse. This will follow with an idiot or two who would say oh just look at Denmark. Well let’s say good luck with it all.

🙄🙄🫣

‘shitty non-selective inner city conprehensives

and there we have it. Some people just can't help showing themselves.’

We see what we want to see and disregard the rest. Again human nature. You have no idea. What I said is accurate. I went to one of said schools. I believe it’s even worse these days. Which is saying something.

Starmers children go to school in a wealthy area, it’ll be a good school I’m sure. Even if it isn’t (har har), his children don’t have to work from their multi millionaire pound home, they have his multi millionaire friends’ pad to go to for private tuition if they choose.

You do know that private schools aren’t obliged to pass on the new VAT charges to
parents via fees? It is a commercial decision that they take - they could chose to cover the additional cost by making savings elsewhere or taking from their profits.

They are obliged to charge VAT to the parents. To do what you suggest they'd have to reduce their fees by 17%.

Ah I didn’t think they were obliged to pass the cost on. The gov.uk website states that they can absorb the cost themselves:

“Charging VAT at the standard rate of 20% does not mean that schools must increase fees by 20%. Private schools charging VAT will also be able to reclaim VAT paid on their inputs, such as capital expenditure and purchases of educational supplies. After recovery of VAT on their costs, on average the government expects schools to be liable for VAT amounting to approximately 15% of fee income, though this will vary between schools.
It will be a commercial decision for individual schools how they fund this additional cost. There are a variety of ways in which a school may choose to do this, including reducing their surpluses or reserves, cutting back on non-essential expenditure, and increasing fees. Whilst it will be for individual schools to consider how they manage this cost based on their individual circumstances, the government expects private schools to take steps to minimise fee increases. On average, the government expects private school fees to increase by around 10% as a result of this measure.
Empirical evidence to date suggests there is considerable variation between schools, with some schools fully or partially absorbing VAT costs and others increasing their fees by as much as 20%, by more than the net increase in their costs as a result of this measure.”

The only way that they can reduce costs significantly is to get rid of staff as that is a school’s biggest cost. So the Government is basically telling the schools to make people redundant.