Tax on school fees

[CheekyUser]

of course it won’t affect the really wealthy but we have three kids at private school and we are now going to withdraw them all. We will see them through the remainder of this school year and from September we have secured places at local state schools. When the alternative is free why would we carry on drawing down on our mortgage and sacrificing holidays and be taxed for doing so. Let the state pay.

I recommend saving for uni top up maintenance costs too. They can be quite the shock. I think many people are rethinking now also because of the uni debt and extra tax for DC being a massive disincentive as well.

Because when we could afford it, we have prioritised our kids education above everything else.

Charming!

You clearly don’t know that many then
You only really know the ins and outs of a school if you are part of it

I’m Presuming state schools have no problems?!

Labour haven't given much thought to the unintended consequences of this policy. If parents will now be having “phenomenal holidays” with capital that would have otherwise been spent on their kid’s education, then it means that a lot of money will be leaving the country, and that is very bad for the economy. If the money had been spent on education, then it would have largely stayed in the UK. This is because independent schools employ a lot of staff, whose salaries are taxed and then primarily spent in the UK economy. Another unintended consequence will be if wealthier parents decide against private education and instead buy houses in the best state school catchment areas. This will push up prices, and make it harder for others to get places at those schools.

Funny how it's the government getting the blame for this instead of the private schools who choose to pass the tax rise on directly to parents...

@CheekyUser The older two will be fine in 6th form and coming from state will be a plus for uni applications. Have your circumstances changed drastically?since you'll be saving on two sets of school fees, why can't you manage to keep the youngest at their present school?

Because Labour is to blame!
School legally have to pass on the 20% VAT to parents, same as any builder/supermarket etc has to.
What they could do is reduce fees based on VAT they are re-claiming BUT:

• Most indy schools only have approx 1 term surplus in their accounts so not much wiggle room
• the business rare rise + NI increase will pretty much wipe out the amount being re-,claimed
• fees pay for staff wages and approx 75% of fees go towards wages, pensions plus the rest on utilities. All of which have risen exponentially

So yes, it is Labour's fault. They chose this policy.
The only schools + parents who won't feel pain are the user wealthy eg Eton et al but they make up 1% of all indy schools. This policy disproportionately impacts small, local and rural schools + parents. Also faith (Muslim + Jewish) + SEN and single sex schools, hence the 3 x legal challenges.

Tiny violin

For the kids forced out of schools where they are happy and settled? Remember it is kids who are impacted at the end of this. All the research shows how detrimental it is for kids to move schools, especially mid-year. In any case, 1000s are currently without a school as LAs don't have the places which results in schools being forced to go over PAN. Tell me, how does that help anyone?
State schools won't get any additional money for new starters mid-year which means they have to do more with less, again tell me how that helps anyone?
You realise each child who leaves indy for state now costs the taxpayer 7.5K per year whereas when they are in Indy they cost the state £0?

You are absolutely right. I’ve had long conversations with the bursar and finance team. These are the facts.

@CheekyUser of course the school bursar would say that though. If it's a school which has had above inflation rises in fees for the past decade though, would the bursar count that as a factor in affordability?

Have you asked the bursar what s/he has been doing in the last 18 months to prepare for the introduction of the VAT? Because as a paying parent I'd be wanting to know.

Many private schools will have alumni associations which have been working in overdrive to pick up donations from wealthy former pupils. If the school is a charity hopefully it'll be doing this. One young man I know has just got himself a job in just such a role.

I do think that whatever your views we are where we are and breast beating won't help; sensible schools will be making smart decisions.

Most indy schools don't have an endless supply of wealthy alumni to tap into. Only 1% are the likes of Eton et al with huge endowment. None of this is the fault of schools!
FYI if we are talking about above inflation rises = justification for VAT/blaming schools for passing it on, then private rents have risen 120% in 10 years, do we expect based on this that private renters could afford an additional 20% tax on their rent?

@twistyizzy
The school my young friend is working at to raise revenue is def not eton-esque! Small private in Kent which I hadn't previously heard of. His remit is to contact alumni.
And let's be honest - families who can afford multiple hundreds of thousands for education across the years and siblings aren't short of a penny

And I'd be much more confident spending the money on education myself if I could see the bursar wasn't just whinging but was taking action with new revenue raising appointments.
Which is why I wondered if OP had interrogated the bursar rather than just letting him/her whine a bit

University applications will not be affected if you’re just moving for 6th form. They look at where students took their GCSEs as well.
It will make no difference

If parents have been able to afford private schools for their children prior to this then they can afford additional tuition & extra curricular activities when moving their children to state school.

Plenty of children move schools at inopportune times, even mid-term, and turn out fine.

As with any paid service, one should always be prepared for price increases. Capitalism does love them. If parents can only just afford the fees of independent schools without rises, then they take the risk that they will have to withdraw their children should the fees go up more than they can afford.

When balancing this against the injustice of tax breaks for fee-paying schools, I really don't see the problem. As with all fiscal decisions there will be some people who fall through the gaps, it's unfortunate but that's they way it is. Sounds brutal? I wonder how many parents of privately educated children protested all the many policies of governments over the last 15 years which have at best disadvantaged and at worst actively harmed, even killed, many others.

It's not that I don't care about your children, but I don't care as much as you do how this decision will affect them. They will not be plunged into a lifetime of hardship as a result of this. They have supportive families who are able to spend many thousands on securing for them advantages others don't have. It isn't class bitterness (I'm well educated, middle class, white) - your children will be OK.

I feel much for SEN children who attend fee paying schools because there is quite literally no other education for them, but this is a policy which is long overdue and needs to happen.

Independent schools are businesses. If they're liable to fold because of a removed tax break then they're not particularly well run businesses. If your child will not be able to access their services any longer, that's really not the fault of the government.

It isn't a tax break, it is a point of agreed principle across Europe that education is zero rated. Only Brexit has allowed this to happen so it isn't "long overdue" because it is illegal in Europe to tax education. If it is a tax break then so is the lower rate PC income tax, so is lower VAT on some food etc.

They aren't profit making businesses, in the same way a supermarket for example is, for the reasons I have pointed out.
How do you know what parents have been concerned with over last 15 years? Most indy parents have used statest some point, only a small % use indy all the way through. Most mix and match with state.

Maybe stop believing Labour lies and actually learn about the issue.

You have made a couple of assumptions based on nothing more that my end opinion is different from yours:

1. you assume that I don't know many parents 'mix & match ' private & state education
2. that I don't know what parents of privately educated children are/have been concerned with politically

"Labour lies" is such an easy cop out for anyone who dislikes Labour policy. You've not demonstrated anything that says independent schools are entitled to the tax relief. You assume ignorance of the matter because I hold a different opinion to you, which means you can better justify your own to yourself more comfortably. My opinions didn't pop out of the air once the tax was announced 🙄

No institution of privilege & wealth, especially those which can be fairly argued to have played a not-insignificant part in the mess our country finds itself, is deserving of charitable status. It's as simple as that.

“No institution of privilege & wealth, especially those which can be fairly argued to have played a not-insignificant part in the mess our country finds itself, is deserving of charitable status. It's as simple as that.”

So in essence, you want to “punish” private schools as a whole for Brexit? Let’s break that down. Boris Johnson, Jacob Rees-Mogg were educated at Eton but also at Oxford university, like many of the current cabinet. Eton will survive this VAT very easily - they will be getting millions back on a sport centre they recently built for 20 million and they will manage their capex spend accordingly in the future. They also have rich families who have prepaid and we do not yet know if HMRC will actually be paying them in the first few years, which appears to be the most likely outcome.
The majority of people who actually voted for Brexit are not Etonian/Oxford types, they tended to be less educated, majority state educated and without higher education. So you are blaming Eton for the state education of those people? Or for tricking them?
In any event, the only schools this VAT policy will throw under the bus are the small cheaper independent schools who have been picking up children with SEND. They could never afford large capex projects, they do not have multi million pound donors who leave legacies in their wills like the top public schools, and they will go bust, en masse leaving the state to pick up the pieces, leaving teachers and other staff without jobs and leaving children with SEND without schools and a future and the tax payer eventually picking up the tab for some of those.

No institution of privilege & wealth, especially those which can be fairly argued to have played a not-insignificant part in the mess our country finds itself, is deserving of charitable status.

Yet Labour isn’t removing their charitable status.

So in essence, you want to “punish” private schools as a whole for Brexit

Lol, no, but interesting that's what you took from my post.

No, Labour isn't removing the charitable status of public schools, because they don't need to in order to remove the tax relief. This doesn't mean, though, that it's right public schools should retain charitable status. Again, there seems to be an assumption here that anyone who doesn't agree with you must be blindly following Labour.

They are not removing a tax relief they are imposing a New tax on education as has been explained already here.
If an institution provides charity they have every right to be a charity.
If the school continue to provide that charity now that they are being taxed that is, if they can afford to of course, they still have a right to retain their charitable status.
Labour are not allowing them to keep their charitable status because they don’t need to in order to tax them. Labour were told, after they announced they would before they were elected, that they simply can’t.
As always they didn’t do their homework first.

This is simply not true for the majority of the private school sector.
Parents work to pay the fees.
Some grandparents support them or pay it all as long as the trust will last.
Once it’s gone it’s gone.
The most students do is pay a small fee to be part of the alumni. Often a one off payment when they leave. ( One of our schools charged £1000 as a one off. The other charged nothing. )

So why have the Freemasons retained their Charitable status when 80% of the money they get from
membership
Interest on funds
Rental property
and Events

goes straight to the Freemasons and their families
Only a tiny proportion goes to the wider population with some now going to the Armed Forces , a lot of whom are Freemasons as well.
Why do they retain their status as a Charity i wonder.
Why do they not pay all their taxes I wonder.