Private School VAT Backtrack?

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There seem to be rumours swirling that Starmer has decided not to bring in the VAT on private schools until possibly 2025/6. After being very clear last year that there would be no phase in and that they would bring it in immediately.
Nothing is as yet confirmed I don't think.

"Finding money" seems easier to some than others. I hope you don't try to give advice on the CoL crisis. 7% rising of fees yearly is one thing but plus 20% isn't small change for most people.

@Opalfleur2025 It's not just the parents who will be trying to navigate this tax, those who have grandparents will be leaning on them (possibly why none of us have any pensions left), teachers and groundsmen relying on jobs, people who need the facilities and might worry they'd be sold to developers. Labour hasn't even addressed that most schools have no green spaces and use private schools for pools and the rest. The 6/7% of kids being affected isn't the full story.

@PanicAttax I think the customary way is to increase your income by getting a better job! Why is this not available to people. Most private schools are 20k at least a year. No it is not small change. But no one with an ounce of sense wanders into a decade long commitment without knowing how to pay for it. If you are struggling with other bills in CoL then sending your children to private school is madness. If you said I’m going to take on 20k minimum financial commitment each year for 8 years or more but at the same time I’m worried about my mortgage or my utility bills then all good sense says you should not do it.

As I've said it isn't my kid.
The parents have had great jobs but one is now very ill. I don't know if you'd noticed but "better jobs" aren't growing on trees. So patronising.
People's lives don't happen as we plan them. I hope these things never happen to you but I hope one day you recognise how rude you are when other's are suffering.

As I say, I afford this on my own. This is a luxury product which costs. If you want it then you pay for it, and it is not rude, just real, and the logic of money. These schools may be registered as charities but they are in business. Everyone has challenges in their life, I am not immune, but like every other bill that comes in it needs paying. In the end no one cares unless you can pay. That is cold hard business.

Sorry, but when we did the forecasting an average annual rise in fees of 5% was seen as conservative, and I had no idea my mortgage payment, food shop and energy bill would double in a relatively short span. We have gone from very comfortable to having to budget very carefully in a relatively short span of time, and it is no surprise that many find themselves on the wrong side of the equation even with careful planning.

i would also like to call out the special pressure of being a send parent. It is all well and good to make a rational choice for private based on a careful financial analysis, but many send parents move to private in different circumstances. Often we have a child that is struggling and getting absolutely nothing from our state school. We are more likely to push the boundaries of reasonable financial planning because we have a child in crisis, and are more focused on shorter term viability because when your child is falling apart now, a financial plan for support in 5 years time means nothing.

At this point they couldn't bring it in for 24/25, we've already got our bill for the next academic year.

It's in the contract of the majority of independent schools that one full terms notice is required to remove your child without penalty, so the fees are always set and sent out during the Easter holidays for the next academic year.

Between the schools and the government there's the cog of local government aka local authorities aka councils, who retained the responsibility for planning and setting pupil place numbers for state schools in their areas, to consider. It's complex enough when they have to respond to rising and falling birth rates and sizes of pupil cohorts. Now this.

My guess is that this 'delay' will at least let local government and the LGA attempt to determine the risk of private school closures and the likely impact on local state schools and SEND budgets, and moves to 'education otherwise'.

I wouldn't like to do that calculation.

If they do it is for their own sake. This is popular but it would create a mess. At the very least this should be for kids starting primary school in two years time. Not for the kids already on education. However, this would present other issues siblings etc…

As a Labour voter (& member) I think this would be an acceptable compromise but only if a detailed report was initiated to properly consider the impact of it.
To impose 20%VAT without considering the 100k+ of kids with SEN (some with EHCP funded by councils) or considering the 170k kids (out of 650k) with fee discounts or bursaries (40k fully funded) provided by the largest collective charity in the UK - providing £900m+ of charitable funding pa seems absurd
VAT Taxing charities ain't a good precedent (charity = 0 profit)
To single out 5-18yo will struggle to passs age discrimination laws (see McLoed judgement on pensions) & nursery or university exemptions seem cherrypicked (legally) - also bad precedent
Charging these same 5-18yo kids VAT on their primary board & lodging, religious practice, games, mental health, pastoral etc when no-one else in the country pays VAT on them again seems discriminatory.
Biggest concern is that if they charge VAT then they can also reclaim input VAT for the last 10 years - huge net positive for such schools & huge net negative for exchequer (& state schools)
If, after a proper consultation with the whole sector, it is shown to make a meaningful difference to state provision then yes I'll go with it (albeit taxing education is regressive & drives us further into hard brexit ideology) but without it, I can only see enormous damage & far less money for the state education sector.....and currently would lose my vote
Tax adults on their unearned income, wealth or city transaction tax instead but let's not blame kids for the inadequacies of the education budget

Some excellent points.

A PP said how popular this policy is with the majority of Labour voters and it's daft to think otherwise. I believe it is popular, not because those Labour voters have examined the details of the policy and truly believe it will change the state sector. I don't even think the Labour Party has done this.

It's popular because it's seen as taxing rich people which feels 'fair'.

Well I'm a Labour voter who is very worried about the VAT increase. I have lots of friends who are also Labour voters who are also very worried about this policy. There are a lot of Labour voters in London who send their children to private schools.

Exactly this. I am a labour voter and I object. I live in one of these boroughs and the local state schools can’t accommodate the extra kids who’s families will opt for state rather that private due to increased costs.

That doesn’t mean the government can’t bring it in. It just means the school might not be able to pass the cost on to you straight away.

This way he wins the votes of the 93% and my even get some votes f on the 7%, very crafty.

The average cost is around £15k actually which is what the school I teach at charges.

"Fees, which held steady during the pandemic, jumped by 5.1% in 2022, up from 4% in 2020-21 according to Schoolfeeschecker. The average cost per child is now £20,480 a year, or £6,827 a term for day pupils, and £34,790 a year or £11,597 a term for boarders. 1There are big regional variations too.10 May 2023"

it’s been Labour policy for years

The VAT policy hasn’t been a policy for years though. There’s been a general aim to harm private schools for years, but not this specific policy.

4 years ago, the Labour conference voted to ban private schools entirely. They eventually realised this was pretty much impossible so scrapped that idea.

The next idea was to scrap charitable status of schools. It would appear that Labour failed to realise that this wouldn’t affect the VAT position and that half of schools aren’t registered charities anyway. They only dropped that idea 8 months ago, replacing it with the current idea.

The idea that the Labour Party have thought through this latest plan, given they’ve already dropped/changed 2 previous ideas which they clearly hadn’t thought through, is naive at best.

I was wondering where you got your figures from and it's the first hit on google if you look for the cost of fees. From a financial advisor? 🤔

Other figures suggest that it is more like around £18k average now. Still a lot of money I grant you.

Where have you read these rumours? I haven’t seen or heard anything.

Quite.

I object to this policy, and I will be voting Labour.

It's got the data from School fee checker. I used their site to check on fees in my area. There's one school charging 15k but the rest are all higher.

Financial advisor?

There was something on the radio the other day - maybe with Tom Swarbrick? Can't remember now. Also rumblings on the staff but that's a FAR less reliable source!
It's all hearsay as I made clear in the OP.

So that precise quote was from school fees checker?

It's just that I found it on a financial advisor's website (from googling what you copied and pasted). 😂

Obviously they used school checker! Just as I did, and came to the same figure. Maybe you live and work in a particularly cheap area for private schools.