Any other Heads publicly worrying about VAT?

[JustanotherBerkshiremum]

DCs at an independent school. The Head is obsessed by the proposed VAT implementation. Since October he has raised this issue in all public correspondence, ie newsletters, the school magazine and the end of term letter.

Are any other Heads out there publicly worrying about the future to their parents or is it just ours? You don’t need to name the school.

I get that it’s an issue but the school can finally claim back VAT. And if they get decent tax advice then they can cushion it a bit more. And it will only happen after the next election if (because nothing set in stone) Labour get in which is two years away.

I’d rather the Head kept his thoughts to himself at the moment. Am I being too harsh?

That article in the i has got so many technical errors in it. Independent schools and VAT has nothing whatsoever to do with charitable status. Schools don’t charge VAT because education is an exempt supply , lots of charities who make supplies of standard rated items charge VAT .

stripping schools of charity status is entirely different and will be super complicated legally. Added to which only 60% of independent schools are charities anyway

"This would effect less well off families the most."

Added to which independent schools already ( unlike state schools) pay shed loads of VAT because they cannot reclaim the VAT they suffer. If labour brings this measure in them as it stands independent schools will be able to reclaim all that VAT ( they are keeping g quiet about this )

sorry I didn’t mean to quite the above post 🫢

We have one DC at private ( never intended to go private but circumstances led us to moving her out of a state comp) and are at the lower end income wise compared to most at the school. We will be fine with the increase - it will mean cutting back in other areas but we would never consider removing her from the school. Looking at the expensive cars and lavish lifestyles of the families at her school I don't think it will have much of an impact. I was surprised when the school governor mentioned the VAT increase at the school prize giving. I found it odd to be talking so seriously about a policy from a political party that are not even in government. I will be voting Labour as I've always done but I still fear this Tory government will still find a way to hang on.

Our head is concerned about it I think. If VAT is added then I think that will reduce a lot of inclination to fund bursaries - money which comes from current and past pupils. We certainly couldn’t and will be cutting back elsewhere considerably to afford it until there is a natural exit point eg moving for A levels etc.

having read on the teacher boards about just now dire the situation is in the schools those teachers are in, - and no amount of VAT is going to fund what needed - especially as the studies were done before interest rates etc rose, so don’t show the full current effect (and the true cost - if more have to move as we will do, the pupil funding will need to go up) , it rather feels like the solution to a problem is make everyone have a rubbish education rather than trying to lift up others. Am not convinced this policy will have the effect they want it to. And if it doesn’t then, it’s just a way of hitting more high middle class earners. The people on 300k plus won’t feel the pinch. But two working parents on 80k each (which is a lot of parents at our school), will do and will have to plan accordingly.

as someone with year 4 and 6 children and considering the local private option, but not being a high income family, this is something that will likely rule private out for us.
I think I broadly support the policy but its the squeezed middle classes who will be priced out of it. Surprise surprise. Labour need to be very careful with this - it will have an impact on the kids of all backgrounds fighting for places at
the better state schools, surely.

Ideally there would be a great education available to all, but it's not that straightforward is it.

I don't know the ins and outs of VAT but my DH is disabled and he doesn't have to pay VAT on things he needs due to his disability e.g. electric bed so he can actually get in and out of it. Something similar might be worked out for schools for children with SEN.

20% would definitely see numbers drop. Is that’s what Keir wants ? The amount of vat will be very small in the scheme of things.

It’s estimated that VAT on school fees could bring in £1.3 to £1.5 billion, and that private school pupil numbers won’t reduce by much, plus those parents taking children out will spend the saved fee money on other VAT rated goods and services.

https://ifs.org.uk/sites/default/files/2023-07/IFS-Report-R263-Tax-private-school-fees-and-state-school-spending.pdf

This is a culture war policy. It doesn't need to make financial sense. It's about throwing red meat to the left wing extremists to compensate for other centrist positions Labour need to take to get elected. Whether it will happen or not is kind of neither here nor there for the culture warriors on each side. It won't make any difference to state school children. It won't make any difference to inequality. In fact, it will worsen it as independent schooling will become more exclusive. Those of us with kids in schools with charitable status will just have to hope that Labour commission an assessment of the impact of this policy before going ahead because it is not worth wasting political capital on. The Red wall won't care.

The charitable status is relevant for children on bursaries. The school also loans the swimming pool to the comprehensive locally and sends a coach to transport the children to the pool. This is all for free, under the charitable status.

I suppose the comprehensive would lose out on swimming lessons and the children on bursaries would have to leave.

If that is the case then the school isn't really a charity, it is just doing those things to justify a tax break. Seems like a strong argument for removing the status then.

@jgw1 it's doing charitable things. It's giving access to facilities that the children wouldn't otherwise have access to. It's supporting children from poorer families to access a great education:".

And if those running those "charities" genuinely believed in those purposes they would continue to do so, whatever the status was.
Its a sop to get a tax break.

But if they are indeed running charitable endeavours, why shouldn't they get the tax break?

The school I’m talking about, definitely gives places to local children for free. Not all children fit into mainstream schools, some of the independent schools give places for free for the whole of the child’s time at that school. That’s certainly a charitable thing to do. To offer families who wouldn’t be able to afford the education normally a free place is a huge thing.

By giving the school a tax break it allows the school to offer these children an educational opportunity they would not have access to. Why shouldn’t they have a tax break for that?

We would not be able to afford it so I would not be voting Labour. I don't want to see the Tories in again but I will not vote Labour at the expense of my children's education - one has SEN and the local state school SEN provisions around here are dismal.

If the Tories do something about inheritance tax then they will get a lot of the older votes so it is not a foregone conclusion that Labour will get in anyway.

The predicted majority is pretty big for now.....if somehow the majority narrows, then it get more difficult for Labour to push this through....but at the moment the Tories are losing badly.

The local state school provisions are dismal because of the Tories. I presume on that basis you will not be voting for them?

People who have children in Private School will vote Tory.

@Caps1974 incorrect but don't let your sweeping assumptions get in the way of facts.

I am not sure that they need a large majority to do this as I am not sure that it requires legislation to levy VAT. The VAT Act allows the Treasury to change the defintion of exempt supplies by regulation https://www.legislation.gov.uk/ukpga/1994/23/section/31 that suggests that they could do this whenever they want as long as they are in government. I am no VAT expert so may be wrong.

The (often conflated but separate) issue of charity status is much more complicated and would need legislation.

If they remove Charitable status, then VAT is applied automatically. They need a majority in the house of commons / lords as well to get this through....which they appear to have in abundance....so it will go through. Even if the Tories abolish inheritance tax, I can't see how that will be enough to stop Labour winning.

If your private school fees are going up around 3-5k per child, trust me you will vote tory...this is where I'm grateful we decided on one child.

I don't think that's right. Charities aren't exempt from VAT. The reason that there is currently not VAT on fees is because education is an exempt supply. That applies equally to those private schools that are charitable and those that aren't.

In any case the charity issue is far more complex and would require legislation. I don't think the VAT change does.

On that basis presumably the 95% of parents who do not send their children to private schools will not vote Tory, as they Tories aren't interested in state education.