Whitehall “braced for private schools collapse” 5

[ICouldBeVioletSky]

Starting a continuation thread in anticipation of the fourth one filling up…

www.mumsnet.com/talk/education/5301690-whitehall-braced-for-private-schools-collapse-4?page=39

Not conflating them at all. But the VAT debacle has made me realise how poorly private schools are treated, how unreasonable the state expectations are on private school parents, and how little I now want to help people who seek to harm my family.

Now that I look at it (due to the introduction of VAT, and the discussions which have followed), I see that the expectations were always unreasonable - even before VAT and the removal of business rates relief. With those added, it's frankly laughable for anyone to have any expectations at all of us giving even more.

Labour have now pretty much entirely removed any tax benefits for being a charity... but only for private schools. So other charities - who do actually get tax benefits - can continue to provide "public good" benefits in addition to their own charitable goal, but I'm against any private school I'm paying for continuing to do so.

Charities don’t receive gift aid on income - they receive gift aid on donations.

Hmm.. I'm pretty sure the National Trust get gift aid on my membership. As do pretty much any museum on admission fees.

Not sure how they get away with that when private schools don't get gift aid on fees to be honest.

Gift-aidable is clearly yet another irregular verb. Applies to all charities except private schools. Like VAT-exemptable. Like business-rates-exemptable. And like the expectations regarding "public good" not related to charitable purpose.

The vast majority of private schools are businesses that pay lip service to the bare minimum requirements to ensure they keep charitable status, that status makes them exempt from corporation tax and some other taxes. Their business is providing education to the wealthy, the bursaries are simply to keep the tax man at bay. At £20k per child you need to be on significantly above average income to afford private schools or have relatives with deep pockets! Private schools perpetuate privilege in the education sector, if all children attended state schools there would be more incentive for those with means to put pressure on government to improve schools. I’m not actually against private schools existing but I don’t see why they should get tax breaks (this actually isn’t even to do with vat) unless they are providing a specific service to benefit the community which could include schools for additional needs which are used by local authorities for complex needs run by bonafide charities, specialist music or dance colleges to support the next generation perhaps but not simply elite schools to raise the next generation of politicians that you need to pay twice the average income per year to attend eg Eton!

Oh dear so much misinformation in 1 post. We have covered most of these in last 5 threads BUT to pick up on 1: in court case judge told government KC to stop using term "tax breaks" and stick to the facts. "Tax breaks" is an opinion, not facts.

They save the state £8k per child per year. That's a pretty big public benefit.

Far more than any tax benefits they have ever had, even before VAT.

And whilst the UK doesn't actually concern itself with how valuable a charity's aims are - it's sufficient that the charity is non-profit-making - I think that educating children well (whoever they are) benefits the UK more than a donkey sanctuary does.

Private schools do more than enough.

NT membership is a subscription that allows free access for a year to inspect the charity’s operations, and does not count as income.

Charities can offer two entry fees - a standard rate and a gift aid rate that is the standard rate plus a 10% donation; they can then claim gift aid on the full entry fee.

Schools that are charities can claim gift aid on donations. Fees are paid for services and are not donations.

@strawberrybubblegumHow have private schools which are charities lost the benefits of charitable status?

Private schools perpetuate privilege in the education sector, if all children attended state schools there would be more incentive for those with means to put pressure on government to improve schools.

Oh God, not this old chestnut again. @minnienono Do you actually think private school parents are some sort of ubermenschen can wave magic wands and improve state schools? This is pretty insulting to state school parents as it implies they’re too incompetent or lazy to do this themselves.

Business rates relief has gone. I would question whether it’s worth some schools to continue being registered as charities. It would mean them paying corporation tax on profits but many make little or no profit and they would have less regulation which is likely to save them costs.

Recycling is good for the environment

They no longer get business rate relief (unlike other charities).

Having membership access to NT is in practice a fee for a service, and pretending it's to "inspect the charity’s operations" doesn't changed that 😂

Then you shouldn’t be so confused about how it might come to pass that there would be less of this excellent work, since it isn’t in fact mandatory

Exactly.

To rub it in: as well as every other type of charity being exempt from businees rates, leisure centres and hotels (which are businesses, not charities, and don't benefit the UK) also get business rate relief.

As does any business whose rates have increased more than 50 % per year, to give them time to adjust.

But not schools.

Despite them saving the state £8k per child per year and improving the UK's future.

Whack on the full business rates... 6 months after adding 20% VAT... 4 months after increasing NMW and NI. And pretend you're not trying to destroy them.

And still they're expected to give more.

It's those irregular words again, isn't it?

Yes. That "excellent work" isn't free. It's been paid for directly by private school parents, who are already contributing way more than is reasonable. Private school families whic Labour and their supporters are so contemptuous of that they deny the harm to them of a stupid policy which will help noone.

Let the other 93% of parents pay for that "excellent work" now. The ones who are getting £8k per year subsidy from the government for their children's education.

You can take that up with HMRC then because it has clearly stated the eligibility conditions - those being those being that you only get membership and, whilst you can gain access to the charity’s properties to view its activities, you don’t receive any personal use of facilities or services.

It’s not a fee for a service because you’re not receiving a service, just entrance to the property during normal opening hours.

I think that's what could actually be called a tax loophole.

I don't really mind - I like the NT. And the other museums and art galleries who get gift aid for my admission.

But there's no real difference.

There is, but hey ho. HMRC has defined what comprises a donation and what comprises a fee for receiving a service

Yes, just like they've defined what is sort of a charity because it has obligations but not the right kind of charity so it gets none of the associated tax benefits.

Labour had to word it very carefully in their bill to harm exactly the people they wanted to, despite it not being in any way logical!

If a private schools with charitable status were to be bold do and ask for 10k in fees to cover basic teaching costs on which VAT would be payable and then suggest that everyone who can could please contribute a termly charitable donation (suggested amount 3k to be grossed up) could HMRC really do anything? If the charitable donations are then used for extracurricular and nice to have extras. I bet most private school parents would donate, claim back the gift aid etc and what exactly could HMRC do? If the school cannot kick the parents out under contractual terms if they do not “donate” isn’t that perfectly legal?

That’s pretty much tax evasion. If HMRC saw a drop in fees matched with a high number of termly donations of regular amounts they’d be taking a keen interest.

The school would have to demonstrate that it could cover its running costs on the fees alone for that set up to count as a genuine fee structure.

@SabrinaThwaite - the donations subject to gift aid would be entirely voluntary, from a legal perspective. The school would cut its mandatory costs right down and then just purchase in services based on donations, which it could gross up and most of the parents could gross up as well. Not sure what exactly is tax evasion, it is a voluntary donation to a charity that then decides to spend it as it sees fit enhancing the education of children.

It’s discussed in this i newspaper article;

https://archive.ph/WrjDd

There are also limits on the value of benefits arising from the donations that would need to be worked around for gift aid to apply. If it was shown that the child was benefitting from the parent’s donation there are limits to the value of the benefit - so a £3k donation would only allow a benefit with a value of up to £170 under gift aid rules.

„But if it’s just a general trend to higher donations and lower fees, with people able to pay lower fees and make no donation, then it can’t be challenged by HMRC in my opinion. Of course, spotting the difference between these two scenarios will not be easy.”
From your quoted article @SabrinaThwaite - and according to Dan Neidle who is a Labour member.