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?

Big article now in the Telegraph too. We have a DD at boarding school. I wonder if the VAT would be on the boarding fees as well as the academic fees. Either way, it is a large amount extra.

Ok so here’s what I don’t get.

As a state school parent I know that schools have had loads of increases in costs, without corresponding increases in budgets. This means cuts.

Private schools are in a much easier position. If their costs increase, they can EITHER increase prices OR implement cuts.

HTs will surely be trying to work out what mix of this they do (cut 10% and increase prices 10%? Or another mix).

How far back can VAT be claimed? I should know but I can't remember?!One of my DCs schools has recently completed a big building project. Presumably they couldn't claim back VAT on any of the costs but will be able to if they can backdate?
Once you factor in capital expenditure for lots of schools the VAT charged on fees could be reduced to very little.

@Caps1974 - lots of parents I know with children at private school don't vote Tory and never will.

No that’s not true . Charitable status does not affect VAT. Lots of charities already charge VAT on their services. Education is an exempt supply that is why they do not charge VAT, roughly 50% of independent schools are already registered for VAT but they don’t charge VAT because education does not attract VAT. In fact a large number of independent schools are not charities at all.

tbe PP is right that the basic charge could be put through as a regulation, the reason it’s complicated is because if they do it that way then independent schools could start reclaiming VAT because they would no longer be the end user of the service ( VAT is a tax on the end user) . It may also catch other suppliers of education for example nurseries, holiday clubs and universities. So they will probably implement a notional equivalent .

Just to be clear though this is a tax on the end user ie the payer of the school fees , not on the school itself.

Sounds like a win win situation to me.
The kids who would have gone to private school have to go to state school which stops state schools closing due to dropping birth rates and the teachers from private schools can get the jobs in state school that are available due to the sheer numbers of teachers being burnt out and leaving the profession in droves😂

Interesting - appreciate you’re not an expert @Mia85 , but do we think Labour want to do away with the VAT exemption and do away with charitable status for schools? I’d not realised they were separate issues or that not all private schools are charities.

I’m just wondering why some schools do have charitable status, and also if there would be any benefit to scrapping it.

@jgw1 so many people are sick of the Tories but so many also don't buy into or trust Keir / Labour. The proposed inheritance tax changes from the Tories before the next election might bring some abstainers back into the fold.

This whole issue is classic Labour. Politics of envy. We can't do things well so let's make it crap for everyone. To quote Maggie "they would rather the poor be more poor so long as the rich are less rich" @

if the lose charitable status will they then also have to pay business rates? that's going to be a hit

Had a couple of tradespeople round today. All three told me they are now voting Tory at next GE.

They don't like the politics on envy, they're very happy about 'Sunak dealing with the green crap' and one is very interested in the inheritance tax changes. None of them are convinced by Starmer.

@OhCrumbsWhereNow exactly

Certainly Labour have in the past talked about abolishing charitable status but it's much more complicated than adding VAT, would definitely require legislation and wouldn't raise much. Here's an article from the Law Quarterly Review (serious academic legal journal) on the proposals to do this in the last Labour manifesto https://api.repository.cam.ac.uk/server/api/core/bitstreams/ca3f6629-73f0-48e6-ab6b-e857094d31f0/content

The conclusion to that article is "This paper has shown that the removal of charitable status from “private” independent schools and/or the redistribution of their assets to other schools may be possible, but would be fraught with legal difficulties. It would clearly require legislation, and fundamental changes to the law of charity, the law of property and/or the legal status of at least some existing non-”private” schools as well as “private” ones themselves. It may also violate the European Convention on Human Rights..."

No doubt lawyers would have different views but it's clearly not the quick, uncomplicated, popular move Labour are looking for.

It's much easier to do the VAT change as it raises far fewer legal issues, probably wouldn't even need legislation and has the potential to raise more money (or at least to impose greater costs on parents).

From what I have seen Labour are only seriously pursuing the VAT policy now but like to conflate it with the charitable status point because it plays better with the public. The public get on board with the message that private schools are exploiting charity law to avoid tax when they are really businesses (even though none of that is accurate). It's much more difficult to sell the policy that you want to amend VAT regulations to stop education being an exempt supply in some circumstances. That doesn't really fly in the same way.

I have to say that the way that they are pursuing this policy makes me much more wary of voting Labour at the next election. The country really needs politicians that use evidence-based policy rather than stoking division. I am really disappointed that Labour seem to be pushing this for ideolgical reasons and seem quite happy to stoke confusion to get support. It's the way they are doing this, rather than the policy itself, that worries me.

Imo it’s the only tool they have left as there is no extra funding

You rightly point out how they muddy the argument for gain

Unfortunately not just this area too.

Very few newer u dependent schools are charities . The older ones were originally formed for east st the time were charitable purposes, added to which it is not possible to hold a permanent endowment within am incorporated body . As Mia says , charity law is very complex you can’t just take away charitable status overnight because if an asset is owned by a charity that is a statement of fact, it’s not something you elect for , it would be like abolishing the legal status of marriage. A charity is a legal body in its own right . Saying you are going to charge VAT on schools makes for an easier headline , even if it’s not the schools paying the tax but the parents

‘Politics of envy.’

I do wonder when I read this. If people REALLY believe it. It’s like that shitty kid at school, who everyone dislikes but their mum’s saying ‘ oh darling, it’s just because they’re jealous of you’

we aren’t. I’m not. There are plenty of us who can afford private schools but don’t, for all sorts of reasons.

You are kidding yourselves if you think this won't happen within the first year of a Labour government. £1.7 billion additional tax to spend on state schools, so why delay? Problem is, fee paying schools do very little that is charitable and are really the preserve of the very wealthy. For those who find it becomes too expensive, there are not enough of them to move the politics of this, given the policy is supported by a clear majority of parents whose children attend state schools.

@Fahbeep 1.7 billion is nothing compared to the overall schools budget. It won't even cover the cost of repairing the concrete, let alone drive standards up. So it is a pointless exercise and purely a political soundbite with no discernable benefit to the public purse or state schools.

Personally I think you are naive to think all that lovely tax will go to state schools.

Like the 350 million a week to the NHS or whatever.

It won’t be that much in year 1 certainly . The vast majority of independent schools , not the big name publics or the London Day schools, are far from the preserve of the fabulously rich. Most of the parents st our local independent are Doctors , lawyers , teachers ( lots) , dentists, farmers, local businessmen, senior management at the local large plc HQ etc But it’s a local former direct grant school so not posh at all.

roughly a third receive financial help, including free places and on occasion uniform and buses. The school provides sports teaching one afternoon a week to every primary school in the town, it also ( and this may be outing) guaranteed that every child within a five mile radius of the school would be able to attend their year 6 school residential by making grants to local primary schools, they also provide music teaching and various other events and allowed their playing fields to be used for two London primary schools to camp every summer together with all meals and provision of transport for trips . In addition the school does joint language exchanges with the local state secondary and teaching for sone niche subjects .

of course it would be better if none of were needed but not all independents are rich as Croesus

Not necessarily. Our DC goes to an indepednent school, and we'll vote Labour irrespective of this policy. People vote for a party for a number of reasons, not always for a single issue affecting their finances adversely.

In any case, number of voters for whom this may actually be significant issue is fairly low. Percentage of DCs going to private schools have never been more than 7% or so.

This with bells on

I don't think all the tax will be spent on schools. But that isn't an argument for not levying it. Ad hominem.

"Most of the parents st our local independent are Doctors , lawyers , teachers ( lots) , dentists, farmers, local businessmen, senior management at the local large plc HQ"

All people likely on six figure earnings which is wealthy. Wealthy is not limited to billionaires. Private schools are a choice, like holidays and extensions. And you pay VAT on that, so why not on this? It's a tax break for the rich in a time of national need.

This is getting airtime in the papers today.

It is really hard to argue against. It would raise revenue, according to the IFS, and is manifestly ‘fair’, especially as private schools have raised fees so much already, mainly to have facilities which rival country clubs, and to build massive reserves.

Heads have so much wriggle room on their £24,000 (where I am) per pupil fees to either make savings or pass the VAT rise on according to their demographic and preferences. The state sector, on £5,200 per pupil, had to absorb the teacher pay rise last year, which caused real pain. Strangely, there were very few threads on here about that!

My bet is they will put fees up by around 10%, give teachers a below inflation pay rise to absorb a couple of percent, push some facilities improvements further back, and increase class sizes a bit (I think they are already too large given the fees).

You will get some pupils leaving, as you do anyway as parents’ circumstances change but, on the whole, private education is a bit of a giffin good for many, like a Hermes bag, the more expensive, the more pleasure it gives as bragging rights.

VAT will be charged and, in a couple of years, no one will care.

What you will find is that bursaries reduce drastically. Why should parents who are paying full fees + VAT subsidise cheaper education for others? Our school has already stated that they will end bursaries. This will affect approx 15% of kids at DDs school and potentially a similar % across the whole sector. Something for those parents who currently receive a bursary to think about and I would advise against any new applications for next academic year.