The effect of VAT on private school fees.

[HeadDeskHeadDesk]

If this is brought in, and it seems likely it will be, I've been thinking a lot about how it's going to shape things in future.

Personally I think it's outrageous to introduce it from day 1 and it should only be introduced immediately for new pupils who are not already in (or signed up to be in) the private system.

Parents should have at least 1 academic year of notice that VAT will be levied on their fees, as their child moves up through each stage of their education, between infants, juniors, year 7 or sixth form. Or in the case of public schools it would be moving from Prep to common entrance.

You should be exempt from paying VAT until your child reaches the end of whatever stage they are at, as it's a natural break with the opportunity to move into the state system with less trauma and disruption to the child. At least that way, you'd have fair warning and plenty of time to make alternative arrangements. People with kids in private junior school will be pushing really hard to get them through the 11+ and hopefully into a super-selective state grammar school, but plenty already do that anyway and only keep their children in private school from year 7 onwards if they are unsuccessful at 11+.

The disruption to children will be terrible if they get pulled out mid-key stage or halfway through the two year GCSE programme, or whatever. Getting a state school place anywhere within sensible distance of home, let alone a good state school place is going to be hugely problematic.

Obviously it goes without saying that very good or outstanding state schools will already be heavily oversubscribed. I can see private school parents pushing up property prices around outstanding state schools (or decent Community Schools where they are obliged to take you at any stage so long as you live in catchment) even more than they already are, or renting out their main home and moving into catchment of those decent state schools in order to secure a place.

Either way, there is no doubt it's going to be carnage.

I'm thinking that as Home Education or Home Schooling is already a burgeoning thing, lots will go that way. But most people who were previously in the position of being able to pay school fees probably don't fit the typical profile of most home educators. The private school parents are most likely people running their own businesses or earning high salaries in professional or corporate jobs that require their full attention, so they are probably not in a position to undertake the home schooling themselves.

I see these parents potentially banding together to create Home Ed co-operatives where they sign their children up to online learning schemes, then collectively employ freelance teachers as private tutors, rent workspaces and meeting rooms etc.

So their 'home schooled' children now learn with with maybe 10 or 20 other children, five days a week, dipping in and out of different sessions according to age and subject and which teachers are available that session, to oversee and supplement the online learning.

It wouldn't take that much to organise and it would be far cheaper than private school if enough families grouped together to fund it.

Indeed - VAT cannot be charged on education services in the EU. Other countries (e.g. Japan, Norway) also choose not to tax education.

Beyond not taxing, and as mentioned by others above, there are quite a few countries that actually subsidise private education, recognising that it provides a complimentary offer to the one provided by the state and frees up state resources. That is the case in the Scandinavian countries, which might be of interest to those advocating that private school should be abolished to allow for a more equalitarian system... it seems that countries like Sweden, Denmark, Finland or Norway manage quite well and actually support that sector. Probably because they focus on the source of the issues rather than gimmicky policies.

You are probably right that the majority will still pay, certainly in public schools but not in small independents

This. People repeatedly equate small independent schools with public schools and they are quite different beasts in some respects. The smaller independent schools may well close, Eton and Harrow will not. Inequality will become even more entrenched. Truly only the very rich will be sending their kids private.

It’s no wonder people are talking about it, given it’s one of Labour’s only firm policies at the moment. Perhaps when/if we eventually see a more detailed manifesto people can discuss other things. It’s a shame Labour think that private schools are one of the country’s main problems.

It won’t happen overnight.

Parents with kids already at schools will grit their teeth to get them to an end point eg end of year 6, end of GCSEs.

Applications will drop, and for schools already undersubscribed, may cause the odd school closure, but probably a year or two down the line

Some schools will have sufficiently rich parents as a base that almost all can absorb it.

The attrition will happen slowly and will steady out.

Yes agree dollen. Dear me.

This!

No. Collective taxation. You also can’t reclaim your NHS ”allowance” if you go private, or your school “allowance” if you don’t have kids.

Could you clarify what point you are making in reply to my response to another poster? Thanks.

Those using private healthcare or those without children aren’t penalised through the VAT system though.

The only people I’ve heard talking about it recently are parents with children in private schools. Over and over again…

It’s not a bloody penalty!!

Well when we hear about all the wonderful things they are going to do for state schools then we can chat about that

There are plenty of people on these threads without children in private school who are discussing the proposed policy.

The only bloody firm
policy what a joke ! Politics of envy when a substantial amount of them pay for their children’s education or buy in a top area I’m looking at you Starmer you complete hypocrite

10 Labour policies

These are their main policies, which show that they will put money into state schools and improve the NHS. Which is what they did last time they were in power. Whilst they do mention the VAT issue, it’s far from their main campaigning issue.

How would you know?

As I said, the private school VAT is the only firm policy. The rest are woolly promises with no detail about how exactly they’ll be funded. It’s easy to stand up and say “I’ll improve the NHS” or “we’ll make the railways better”, or “we will make our rivers clean”. We need to know HOW.

They don’t even understand the basics of that VAT policy. “Private schools currently benefit from an unfair tax break that means they avoid paying VAT on fees”. It’s not the schools which will pay the VAT. It’s the parents. The schools will simply account for the VAT charged. It’s fairly basic stuff which they can’t get right.

Because previous posters discussing this policy on MN and declaring their support of it have stated that their children are in state school.

The private schools can take the hit if they want to - it’s their choice to pass that charge onto parents.

As for the rest, there is money. This government has given it all to the few and has stopped funding public services. It’s disingenuous to be unable to acknowledge this. Why else do you think the HoL voted down some of the proposals to Tax credit changes at the same time massive tax breaks for the rich were proposed?

I can't remember off-hand the detail of what the number of pupils counts as a a school, but there are rules on this, and groups (whatever you call them) must therefore meet all the regulatory and governance standards, and pass inspections. And would therefore be subject to VAT when it is brought in.

The rules were brought in to regulate small educational groups designed to supply the main source of education (often established by religious organisations) especially as there were, at that time, concerns about fostering of extremism or very eccentric world views.

More than a couple of HE families sharing a tutor on a regular basis would probably be caught by this definition (occasional groups or single-subject seminars would be OK). So if you wanted full teaching by specialists, you are looking at running the smallest and most pricey school there is.

Notice of VAT should be set to allow parents time to give notice to quit without penalty before the new fees structure comes in. Standard notice is one term (that's an actual term, not the equivalent number of weeks). So I think it would be too much of a scramble to be ready for Sept 2024. But it could be any point after that.

It's not a penalty but it is an exception to a VAT rule that applies to every other educational establishment. Almost no country in thr work taxes education because they recognise the absurdity of doing so given the net benefit.

Do you also think VAT should apply to university fees?

This is the equivalent of adding an extra tax to private healthcare costs to raise funds for the NHS.

All absurd but driven by the ridiculous war on the "rich" when many middle class parents paying school fees are already higher rate taxpayers with an effective tax rate of 40%+ and paying more then their fair share into the system.

It's no wonder so many people I know have left the U.K. for the Middle East, Hong Kong and Singapore. I don't think people will be happy until those perceived to be better off than them have an effective tax rate of 60%+!

I don't understand this point that keeps getting made. VAT is borne by the customer (parent! not the school isn't it??

Quite. A list of pledges does not policy make.

“The private schools can take the hit if they want to - it’s their choice to pass that charge onto parents. “

Not many businesses can reduce their primary income ie the base fee by just under 20% and still be fine. Not many businesses have net margins that are high enough to do this.

@ladykale the school will have to pay over the output VAT (VAT on fees) to HMRC less any input VAT they can claim.