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.

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

Yep. A policy which I would also consider reasonable.

And I have both private healthcare and send my kids to private schools.

The mechanics of putting VAT on certain educational and healthcare services are tricky, legislatively. But the philosophy of saying that private schooling and private healthcare should be taxable “luxuries” given that there is a state alternative is a considered and consistent one.

I don’t think universities should have VAT on fees, because I view them as equivalent to the state education system.

It is definitely schools that pay the VAT. The prep school near me has promised parents they won’t increase fees for 2 years if that policy is implemented.

But the philosophy of saying that private schooling and private healthcare should be taxable “luxuries” given that there is a state alternative is a considered and consistent one

Wow. So only the super rich will be able to afford a private scan or a private consult that they are desperate for when the waiting list is perhaps months long and they cannot get to see their GP? Lucky you not to be in that precarious position. 🙄

Nope. Nope nope nope.

Parents pay the VAT on the service. Schools can reclaim VAT on purchases once VAT registered - good for eg building supplies.

Schools can lower their base fees by something like 17% so that the parent pays 20% on the lower fee and the gross amount paid by the parent ends up the same. but the school then hands over the 20% collected to HMRC.

Cutting public services to the bone is, and always has been Tory brand of politics. And making the richest richer.

It definitely isn’t. From the government website :

“Output VAT (or output tax) is the VAT you charge and collect from your customers on goods or services going out of the business if you're registered for VAT”

The customer pays the VAT. The business, ie school, merely accounts for it. The only way a school can mitigate the impact of VAT is to reduce their fees.

Plenty of people already can’t afford private healthcare, so not sure what point you are making here?

Not sure what that has to do with my post?

It has to do with what different governments choose to spend money on.

My point is that this poster is happy for it to become more expensive and more exclusive - which is how private education will go. People have been driven to seek out private health appts by scraping the cash together/borrowing because the state provision is not helping them. They will be forced out of that option - how is that good thing?

Well I was referencing the woolly pledges made by Labour.

How are they wooly? Since this government got into power they have cut council budgets by 50%. And that’s why public services don’t work any more.

Nothing is costed.

I am pointing out that it is a philosophically consistent point.

In a fully socialist approach, private healthcare and private education would be abolished, the railways would be renationalised, all that jazz. A socialist-lite approach to consider private provision of things that are available via the state to be luxuries and add VAT to them accordingly is consistent.

Additionally, many more people will have their private healthcare covered by work PHI payments than have school fees covered by work. In that sense, putting VAT on such services would probably lead to fewer people dropping back to state (and hence raise more in VAT income) than the VAT on school fees.

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

Yep. A policy which I would also consider reasonable.

What about when the NHS uses the private sector to speed up waiting lists, as they have been for example for eye operations, since covid? Would you like to see their costs increased by 20%?

I don’t think universities should have VAT on fees, because I view them as equivalent to the state education system.

What about nurseries?

And schools for special needs children?

No to nurseries, no to schools for special needs children,

Ok to the NHS paying VAT to private hospitals as it would simply wash straight back through to the government - if possible to avoid the admin, then no, but the net effect would be small

I have said this on plenty of the billions of other threads on this matter, I'd be very wary of any school passing a full 20% on - they must be able to reduce fees so the impact is not a full 20% to the parents.

Exactly so. If necessary they need to pare back their operating costs - like state schools are constantly having to do. Reduce their staff structure, building/maintenance costs etc.

Wes Streeting on QT last night commented that the independent school they were in had increased its fees by 18% - way above inflation.

Wes Streeting using public schools 🤦‍♀️

As you have stated you can afford both private healthcare and private education for your children. Are you something of a champagne socialist by any chance?

“Wes Streeting on QT last night commented that the independent school they were in had increased its fees by 18% - way above inflation.”

Because private school teachers are paid by the school, not the state, the contributions to the TPS are also paid by the private school (rather than the government). However, such schools have no control over what increased % they have to pay to stay in the TPS. That is set by the government. It is one of the reasons why fees have gone up by a greater percentage than previously.

Wes Streeting on QT last night commented that the independent school they were in had increased its fees by 18% - way above inflation.

I’m not sure how he thinks that the example he gave backs up his argument. Using the example he gave, and the Bank of England inflation calculator, that school’s fee increase is actually below inflation.

Sigh. I am not arguing for myself, here.

We would not start our kids at private school now, given the VAT introduction and other fee increases. But I would still have voted Labour if we were 5 years earlier in our school journey than we are.

Through the fiscal drag of barely increasing the thresholds to pay income tax, say, the Tories have fucked over many less privileged people than those who can pay school fees at the current level but not at 20% higher, or whose PHI premium has gone up by a few hundred.

There’s not a tax policy out there which doesn’t impact some people negatively. I think this is a better one than most.

But since you are going ad hominem now, I will leave it there.

After all these many, many threads about rich people complaining about paying VAT on a luxury product, i can't wait to vote for labour.