Page 8 | Nope to labour

Philandbill · 15/06/2024 08:00

Karlmayforpresident · 15/06/2024 06:47

Very interesting article. And extremely illuminating..

‘Most private schools claim

80 per cent reduction in business rates
Gift aid
No tax payable on ‘profits’
No tax payable on their investment income
Covid Loans

Most state schools (‘academies’ are treated differently from others) don’t benefit from these tax breaks for various reasons. Most private schools are charities and only pay 20 per cent of their business rates, depriving cash-strapped local authorities of £144 million per year. It’s worth noting that certain specialist schools were exempt from this change. Private schools can also benefit from being able to claim gift aid on any donations, as can the donor. Let’s say you wanted to donate £100k to your old school and were a top rate tax payer. The school would be able to claim an additional £25,000 in gift aid from the tax-payer, and you would also be able to reclaim £31,250. Donate £100,000 to your local primary school and it actually costs you £100,000, so probably not worth it – just donate a bottle of wine instead! Parent-Teacher Associations can register as charities and claim gift aid, but they are only allowed to raise money for specific things, and not for the running costs of the school.

While charities aren’t allowed to make a profit, for many private schools, in practice this means they can make a nice surplus which then goes towards a new swimming pool, theatre, upgraded science equipment and so on. They don’t pay tax on any of the surplus, even if it’s sitting in a bank account.
Many private schools also have investment portfolios, and again, they don’t pay any tax on the income from these portfolios. In fact, there’s a nice tax loophole for the super-rich whereby they pay all their fees upfront, the school invests the lump sum, gets the returns tax-free, the parent receives a discount and once their child leaves, the school and parent split what’s left.
During the Covid-19 Pandemic, private schools were eligible to apply for a loan with the government covering the first year’s interest payments, which state schools could not apply for. Just another example of private schools benefiting financially from their charitable status, while state schools missed out.
The reason for all these tax breaks is down to the fact they are classed as charities.’

@Karlmayforpresident thank you for posting this.

Lopine · 15/06/2024 08:09

Karlmayforpresident · 15/06/2024 06:47

Very interesting article. And extremely illuminating..

‘Most private schools claim

80 per cent reduction in business rates
Gift aid
No tax payable on ‘profits’
No tax payable on their investment income
Covid Loans

Most state schools (‘academies’ are treated differently from others) don’t benefit from these tax breaks for various reasons. Most private schools are charities and only pay 20 per cent of their business rates, depriving cash-strapped local authorities of £144 million per year. It’s worth noting that certain specialist schools were exempt from this change. Private schools can also benefit from being able to claim gift aid on any donations, as can the donor. Let’s say you wanted to donate £100k to your old school and were a top rate tax payer. The school would be able to claim an additional £25,000 in gift aid from the tax-payer, and you would also be able to reclaim £31,250. Donate £100,000 to your local primary school and it actually costs you £100,000, so probably not worth it – just donate a bottle of wine instead! Parent-Teacher Associations can register as charities and claim gift aid, but they are only allowed to raise money for specific things, and not for the running costs of the school.

While charities aren’t allowed to make a profit, for many private schools, in practice this means they can make a nice surplus which then goes towards a new swimming pool, theatre, upgraded science equipment and so on. They don’t pay tax on any of the surplus, even if it’s sitting in a bank account.
Many private schools also have investment portfolios, and again, they don’t pay any tax on the income from these portfolios. In fact, there’s a nice tax loophole for the super-rich whereby they pay all their fees upfront, the school invests the lump sum, gets the returns tax-free, the parent receives a discount and once their child leaves, the school and parent split what’s left.
During the Covid-19 Pandemic, private schools were eligible to apply for a loan with the government covering the first year’s interest payments, which state schools could not apply for. Just another example of private schools benefiting financially from their charitable status, while state schools missed out.
The reason for all these tax breaks is down to the fact they are classed as charities.’

This!

Aladdinzane · 15/06/2024 08:20

This thread is amazing.

It really, really does show how out of touch a good number of MN posters are with the rest of the country.

The GC obsessives, who have for years said " at least the Tories know what a woman is" so are prepared to overlook all the damage done to women by the Tories over the last 14 years just because they make some pandering noises to their prejudices. Thread after thread, year after year, of hyperbolic and bullying language towards trans people or anyone that might seek a slightly different approach to them, and the absolutism that this is the most important issue right now.

Most people don't think it is, in fact outside of the odd Daily Mail clickbait most people never think about it. Outside of MN, virtually no one thinks this is a major issue either politically or in terms of risks to women and children, you know why? Because it really isn't. There are far, far bigger issues for both that need fixing, and whatever the solution to the issue regarding trans rights, they aren't going to be your absolutist ones.

Also the private school parents, who for years have told MN that privately educating your child is about choices, and that they make SACRIFICES in order to send their children to private school, in a rather holier than thou way. Now there is thread after thread after thread with special pleading about why this shouldn't occur, and won't someone PLEASE think of the poor children who's parents are very ordinary and have made SACRIFICES.

The problem, is that most people have eyes. We know who privately educates their children, we have friends and family, we can see the cars at the school gates and the students they drop off. The data on who privately educates their children shows that participation rates only rise from close to zero % of children in each household income decile, once you get to the top one. In fact it only raises above one at the 90th percentile, and above 5% at the 95th. Do you know how much money you have to have to be able to get into the 90th percentile? 125k, net. This totally corresponds to what people see for themselves. There are some below this on bursaries ( but apparently 4/5 below the 90th percentile are paying full fees) but really, it isn't that many.

They don't want to pay this, so the noise they've made has been huge, like I said, special pleading, making veiled threats about migrating their children so those of ordinary folk are pushed out of good education, leaving the country, reducing their hours. All the while whinging about how HARD they worked and about how the are net tax contributors and must be treated with special privileges.

Both groups need to hear something.

Most people don't care about your issue.

All of the millions of words you've written, all of the hot air? Most people don't care. They are ambivalent at best or, in the case of the VAT on private school fees, broadly in agreement with it.

ObliviousCoalmine · 15/06/2024 08:24

@Aladdinzane 🎉🎉🎉

Lifelikinotdothinki · 15/06/2024 08:42

Ok you don’t care but you have no clue how many women care about trans issues. How could you? My family are affected by trans. This kind of situation opens your eyes to what’s going on. You learn things you didn’t want to know about but it also puts you in touch with others, not just in the U.K. but worldwide. It’s a massive thing right now and women need to speak up about their rights, their safe spaces and their children’s safety. BEFORE IT’S TOO LATE.

bookworm14 · 15/06/2024 08:44

Excellent post, aladdinzane.

Didimum · 15/06/2024 08:45

asterel · 14/06/2024 23:46

Not true. We’ll be on a bursary and are not well off — we come out as below median household income after rent and housing costs. But we don’t spend money on things that lots of people do - holidays, cars, etc. Now, you might say that people pay VAT on those, and that’s true. But there’s a reason most developed countries don’t charge VAT on education, even private education. It’s because that’s inherently a regressive policy. I’d thought better of Labour: there’s plenty of unearned wealth and corporate profits in the U.K. ripe to be taxed, from second homes to energy company profits, but they’re going for a spite-based headline policy that almost certainly won’t raise much revenue and does nothing to affect the most exclusive schools and the really wealthy, but targets a small number of middle-income parents at the margin.

It’s the equivalent of the child benefit cap for Tory voters: it plays to the worst instincts of the voter base whilst merely tinkering around the edges, and punishes children for their parents’ income and situation, as well as destroying an important principle in public life.

It’s a shit and badly thought through policy, and no matter how many people go “GOOD anyone who pays privately is POSH and deserves it!” that doesn’t make it a good one, it just means voters like the idea of punishment for others whether or not the “right” people are actually getting punished.

Show quote history

Labour literally are going after energy company profits … so …

Bursaries are specifically for lower income families, so they are not part of this equation. Full fees are for people who can afford them. It is foolish to gamble with your children’s education and wellbeing by deliberately setting up a costing scenario that teeters in the brink of failure.

This does not solely appeal to spite politics. I can comfortably afford private school fees for two children, but I choose not to because I don’t believe in segregated education.

Aladdinzane · 15/06/2024 08:52

@Lifelikinotdothinki

"It’s a massive thing right now and women need to speak up about their rights, their safe spaces and their children’s safety. BEFORE IT’S TOO LATE."

It isn't.

asterel · 15/06/2024 08:54

That article is quite misleading. No matter what people like to think, many private schools are registered charities (not all) - as in fact technically are state schools (educational charities mostly come under the Charity Commission but state schools are also technically exempt charities under the aegis of the DfE rather than the CC). There’s no particular reason why private schools shouldn’t be charities if they fulfil the requirements of the Charity Commission. Just because you don’t like the idea doesn’t mean they shouldn’t be!

There’s a huge range of different kinds of educational charities (I’m a trustee of two); and suggesting all schools are like the description above is like saying that because Oxfam has a huge budget and lots of shops then every charity does.

Lifelikinotdothinki · 15/06/2024 08:56

Aladdinzane · 15/06/2024 08:52

@Lifelikinotdothinki

"It’s a massive thing right now and women need to speak up about their rights, their safe spaces and their children’s safety. BEFORE IT’S TOO LATE."

It isn't.

You clearly have no clue. Just saying it isn’t means nothing. Labour don’t even seem to know what constitutes a woman. It’s a party for men.

Runaway1 · 15/06/2024 08:58

I see the private school VAT issue as a massive dead cat really. How are they going to fix state schools? I’d prefer to hear some positive and inspiring policies. I guess there’s some demographic they think will be persuaded to vote by this.

asterel · 15/06/2024 09:01

Didimum · 15/06/2024 08:45

Labour literally are going after energy company profits … so …

Bursaries are specifically for lower income families, so they are not part of this equation. Full fees are for people who can afford them. It is foolish to gamble with your children’s education and wellbeing by deliberately setting up a costing scenario that teeters in the brink of failure.

This does not solely appeal to spite politics. I can comfortably afford private school fees for two children, but I choose not to because I don’t believe in segregated education.

Show quote history

Bursaries are part of the equation: most are partial bursaries, so they don’t cover all the fees. That leaves lower income families still having to find additional amounts fir the VAT. So bursaries will become more difficult to get and fewer of them will be available.

If you don’t believe in private education, this is a policy that does nothing to address that — it won’t affect the wealthy and the most expensive independents. But it will affect a few less wealthy children. It also destroys an important principle of not charging VAT on education - only possible because we aren’t in the EU any longer - which puts us out of step with other EU countries.

pointythings · 15/06/2024 09:03

The argument that VAT on private education will lead to a massive run on state schools and cause enormous pressures everywhere has been addressed in yesterday's edition of More or Less on R4 - maybe listen to that, and learn.

Didimum · 15/06/2024 09:09

asterel · 15/06/2024 09:01

Bursaries are part of the equation: most are partial bursaries, so they don’t cover all the fees. That leaves lower income families still having to find additional amounts fir the VAT. So bursaries will become more difficult to get and fewer of them will be available.

If you don’t believe in private education, this is a policy that does nothing to address that — it won’t affect the wealthy and the most expensive independents. But it will affect a few less wealthy children. It also destroys an important principle of not charging VAT on education - only possible because we aren’t in the EU any longer - which puts us out of step with other EU countries.

Show quote history

Then the same logic goes for places on bursaries – if you can comfortably afford the additional, go for it, if it looks precarious, don’t.

It is not meant to affect the wealthy or the most expensive independents, it is meant to generate added income from them. Any thing other than that is an assumption, by labour and by anyone, based on forecasts, not facts. Older EU legislation does not, by virtue, make it ‘important’, especially not when your right to education readily exists anyway.

Another76543 · 15/06/2024 09:09

Karlmayforpresident · 15/06/2024 06:47

Very interesting article. And extremely illuminating..

‘Most private schools claim

80 per cent reduction in business rates
Gift aid
No tax payable on ‘profits’
No tax payable on their investment income
Covid Loans

Most state schools (‘academies’ are treated differently from others) don’t benefit from these tax breaks for various reasons. Most private schools are charities and only pay 20 per cent of their business rates, depriving cash-strapped local authorities of £144 million per year. It’s worth noting that certain specialist schools were exempt from this change. Private schools can also benefit from being able to claim gift aid on any donations, as can the donor. Let’s say you wanted to donate £100k to your old school and were a top rate tax payer. The school would be able to claim an additional £25,000 in gift aid from the tax-payer, and you would also be able to reclaim £31,250. Donate £100,000 to your local primary school and it actually costs you £100,000, so probably not worth it – just donate a bottle of wine instead! Parent-Teacher Associations can register as charities and claim gift aid, but they are only allowed to raise money for specific things, and not for the running costs of the school.

While charities aren’t allowed to make a profit, for many private schools, in practice this means they can make a nice surplus which then goes towards a new swimming pool, theatre, upgraded science equipment and so on. They don’t pay tax on any of the surplus, even if it’s sitting in a bank account.
Many private schools also have investment portfolios, and again, they don’t pay any tax on the income from these portfolios. In fact, there’s a nice tax loophole for the super-rich whereby they pay all their fees upfront, the school invests the lump sum, gets the returns tax-free, the parent receives a discount and once their child leaves, the school and parent split what’s left.
During the Covid-19 Pandemic, private schools were eligible to apply for a loan with the government covering the first year’s interest payments, which state schools could not apply for. Just another example of private schools benefiting financially from their charitable status, while state schools missed out.
The reason for all these tax breaks is down to the fact they are classed as charities.’

Only around half of private schools are charities. The other half aren’t, and pay tax accordingly. The other half have to meet the requirements of the Charities Commission.

With regard to the business rate position, the half of private schools which are charities can claim a business rate reduction. Half of private schools can’t. State schools aren’t treated any less favourably. 80% mandatory rates relief is applied to academies, voluntary-aided schools and foundation schools. 82% of state secondaries fall into this category. The remainder have the business rates paid for on their behalf by central government.

Donate £100,000 to your local primary school and it actually costs you £100,000

This simply isn’t true. With regard to gift aid, state schools can also claim this. Parents, or others, are free to make voluntary donations and gift aid can be claimed accordingly.

To suggest that private schools are treated more favourably than state schools is disingenuous at best.

https://assets.publishing.service.gov.uk/media/5a7dd14740f0b65d8863497b/intro-for-school-governors.pdf

Another76543 · 15/06/2024 09:11

Lopine · 15/06/2024 08:09

This!

Show quote history

A lot of that post is factually incorrect (re business rate and gift aid position)

izimbra · 15/06/2024 09:12

Mrsdeehoang · 14/06/2024 21:51

I was considering voting for Labour, but their manifesto proposal to change the VAT on private education has made me reconsider. I'm not financially well-off, just about managing, and I took on two jobs to afford the fees for my son’s private grammar school. Despite our efforts, he couldn’t get a place in any of the five local state schools due to oversubscription, and our appeal was unsuccessful. We were instead assigned a school outside our area with a poor Ofsted report. Faced with this choice, I opted to work harder to provide him with a better education privately. The proposed VAT changes would make it even harder for families like mine to manage.

For me, Labour doesn’t seem to understand that not everyone who sends their children to private school is wealthy. I don’t like the Tories either, but I would rather vote for them than for Labour.

Your child is legally entitled to a state school place.

I've never heard of anyone not being offered any school place for their child.

Can this really be true? Which borough are you in?

Willyoujustbequiet · 15/06/2024 09:13

asterel · 14/06/2024 23:32

It couldn’t be done while we were in the EU, as it’s an EU principle not to charge VAT on education.

So if you’re a Brexiter, it’s a bonus for you that you now get to punish children whose parents are only just slightly better off than you or on bursaries - woo! Result! 👍

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Just slightly better off?

Hahahahaha

Meanwhile back in the real world.....

izimbra · 15/06/2024 09:20

Has anyone got any links to any research on the incomes of those who use independent schools?

Because without that the insistence that most/many people who use them are on average incomes feels a bit hard to swallow.

Would also be interested to know if the bursary system is used to cover school fees for low and middle achieving children from lower income families? Because IMO an education charity that excludes support for children who aren't already high achievers in the state sector seems a bit arse about face.

asterel · 15/06/2024 09:24

izimbra · 15/06/2024 09:20

Has anyone got any links to any research on the incomes of those who use independent schools?

Because without that the insistence that most/many people who use them are on average incomes feels a bit hard to swallow.

Would also be interested to know if the bursary system is used to cover school fees for low and middle achieving children from lower income families? Because IMO an education charity that excludes support for children who aren't already high achievers in the state sector seems a bit arse about face.

I don’t think anyone is suggesting that “most” people who use them are an average incomes - just that some are, and it’s those people the policy will affect, not the actually wealthy.

Re bursaries - it depends on the school.

izimbra · 15/06/2024 09:28

I've posted this comment on every hand wringing thread about VAT on school fees, with zero sensible responses. So trying again here:

Teacher salaries are schools' biggest costs. Private schools have - on average - half the number of children per teacher than state schools. Why is it not reasonable to suggest that private schools reduce costs by increasing class sizes, as state schools have had to do in response to austerity cuts? This would allow them to reduce fees and take pressure off parents who are financially stressed.

This is particularly reasonable IMO because private school fees have increased in real terms by a fairly significant amount over the past 14 years (by 20%).

Another76543 · 15/06/2024 09:31

izimbra · 15/06/2024 09:20

Has anyone got any links to any research on the incomes of those who use independent schools?

Because without that the insistence that most/many people who use them are on average incomes feels a bit hard to swallow.

Would also be interested to know if the bursary system is used to cover school fees for low and middle achieving children from lower income families? Because IMO an education charity that excludes support for children who aren't already high achievers in the state sector seems a bit arse about face.

The IFS did a report which showed that 75% of private school children were in households in the top 3 income deciles. This means that 25% are in the 4th decile or below. Gross average household income in the 4th decile is around £65k per year (equivalent to both parents earning an average salary).

izimbra · 15/06/2024 09:31

@asterel "I don’t think anyone is suggesting that “most” people who use them are an average incomes - just that some are, and it’s those people the policy will affect, not the actually wealthy. "

Any idea what percentage?

If it's only a small percentage then is it not possible for private schools to subsidise these hard up families?

Shakeoffyourchains · 15/06/2024 09:32

Theunamedcat · 14/06/2024 22:01

They will obviously backtrack on it or make it vanity taxed at 5% because it's unpopular

It's not unpopular though. Well, it might be for the few private school parents who haven't worker hard enough to be able to cover an increase in fees but for everyone else it's a welcomed move or a non-issue.

Beekeepingmum · 15/06/2024 09:34

A small but very noisy part of the population are affected by this. The number of people who can afford private school but not private school plus 20% must be tiny.