VAT and Bursary impact

[tam255]

For some parents in London on a reasonable income who can’t afford to buy in the catchment of a good/ outstanding school, sending to a private school with partial fee assistance/ bursary is the next best option.

Often these big private schools in London in fact often support the state sector, local schools in their area with use of facilities, pools, drama studios etc and are very generous indeed even with teaching staff, Saturday schools etc supporting local schools. This important fact just seems to be forgotten.

As for the student intake, in fact in London most of the private schools have more diversity than the superselective Grammar schools!! Getting a place into a superselective Grammar school for a child in London requires deep pockets. A bright child who cannot afford all the numerous tutors and mock classes etc has no chance of getting through a superselective grammar school and if you can’t afford to live in the catchment area of a good comprehensive will miss out there too.

The reality is that, if a child on a part bursary is in primary school yes, you could have an option to move to a state school at some point. However if a child on a part bursary say is in private secondary school yr 9 onwards ( where subject choices etc have been made) it’s going to be impossible to just change them to the state sector till sixth form.

Yes, there will always be millionaires and billionaires in the private schools but also a lot of parents who are covered partially with bursary’s. With all the vat added it will impact the bursaries which is sad and more importantly the support the private schools offer to the local state schools around in their catchment.

@PeachSalad "re-invested in school, salaries etc"

Profit is what's left after you pay the costs. Salary is one of the costs. They don't charge fees intended to "make a profit" they charge fees calibrated to the costs they predict to cover. The size of the salary and the amount of staff etc is discretionary. Surely you can see the shades of grey there.

Anyway, something like 93% of students are state-educated.

Yet over the past decade, the gap between private school fees and state per-pupil spending has more than doubled (in England). The London state secondary my friend's daughter attends used to provide laptops to students on FSM, but took them back because they could no longer afford the scheme. Where were the local private schools and their charity then?

I don't accept that private schools shouldn't have to pay VAT. The inequality is too stark.

That particular bit of googling says that the ISC is a not for profit organisation. It doesn’t say anything about Dukes

This is agonising.

I didn’t say fee income was profit. I said the majority of fee income came from the UK, I,e, from UK private schools. This was so you didn’t say it was from oversea private schools.

I assume you’ve read the accounts, at least the income statement? And will note that Dukes is generating positive EBITDA. This then turns to an operating loss primarily due to a large amortisation charge and financing costs because the company is leveraged to reduce tax. The former is non-cash, the latter due to structuring the debt to achieve a particular end.

You are wrong. And Wikipedia is not helping you.

And turnover is revenue or in this case fee income, not profit plus expenses - though they will sum to the revenue number.

Companies cannot control their revenue but subject to any interest from HMRC they can control their costs and indeed choose them and structure them to achieve their own ends.

The size of the salary and the amount of staff etc is discretionary. Surely you can see the shades of grey there.

Absolutely. And I have never questioned anybody saying what you stated above.

I am just absolutely tired of people here saying that private schools are for profit. Not they not. It is not allowed in UK. They all have status as not for profit and charities.
But it doesn't mean they cannot give the directors an obscenely large salaries.
Yet this cannot be called profit

The rest of your post - I don't understand why you telling me that. Did I ever stated that I am against VAT on private? No. I am just trying to explain few people that in UK all private schools are not for profit because that is the law

Not sure how that relates to my statement that in the UK all of the private schools as per law can not have " for profit" status as a business entity.

Our tax laws are so complex that what has happened is that private equity companies have found ways of buying private schools and then I suspect they structure their companies so that they comply with the law. If there wasn’t profit to be had, private equity companies wouldn’t bother or sniff around.

I’m certain you don’t understand it but it doesn’t make you right.

You’ve become hung up on a particular point despite it being utterly irrelevant to the reality that some schools are owned by Private Equity and similar structures in order to generate a return for their owners.

Whereas if they have charitable status there is no such return because any surplus is taken to reserves for later investment in the school.

Dukes education is absolutely for profit, they made some stupid fees increases with nothing to back these up with

they also sent a childish letter in response to Vat decision last week

the only reason I don’t regret accepting that 11+ offer is because now I know what a awful, entitled , money grabbing school looks like .

Got to fund KH somehow - should planning permission ever be granted

i can’t imagine what the fees will look like once kids move there

planning our exit

The school where my DDs are studying offers a bursary program. I have already suggested closing the program to the headmaster.

jesus wept.

@PeachSalad

You are so sure that UK private schools cannot make a profit. This is simply factually wrong and 10 minutes of googling will confirm this.

Please supply legislative provisions backing up your belief, or, failing that, the appropriate bits of the HMRC guidance.

also could you please explain exactly why private equity and sovereign wealth vehicles are bothering to put money into UK independent sector schools?

You say it’s the law. Point us to the relevant primary or secondary legislation, or relevant case law.

Dukes Education is a private company providing education for profit
They are not and have never been a charity

Here:

Have you actually read the picture you’ve posted?

Google is not your friend here. It’s making you look a bit silly.

Yes. It is a not for profit organisation..Feeling better when you offend somebody?

https://www.independent.co.uk/news/uk/politics/forprofit-schools-have-no-place-in-britain-says-tory-education-secretary-nicky-morgan-10257148.html 

Do you understand this article?

Do you understand the difference in not - for- profit business/ organisation entity and profit in common usage meaning income?

Private schools in Uk cannot be registered" for profit" and are either registered as"not for profit" or charities.

How difficult is it to understand that? Anybody had a macro or microeconomics at uni? Probably not

The Independent School Council is a not for profit organisation.

That is what your picture says.

You’re not helping yourself.

What I am sure of is that as other people have no idea what does " not for profit" as a business entity means and you are mistaking it with the common understanding of the word " profit".
Yes, private schools have income. But they are operating as a charity or " not for profit" entities. In UK a private secondary school would not be registered as a " for profit" organisation

Ok..so in your opinion there are in UK private schools at a secondary school that are registered as " for profit" business entities?
How exactly they accomplished that if it is not allowed?
You copy pasted some trust, some holdings. We are talking about schools. Holdings have a role of " money reserve", act as a " bank" in a sense.

How difficult is it to understand that? Anybody had a macro or microeconomics at uni? Probably not

Both.

I’m going to repost my link to this article from schoolsweek as they’ve highlighted who owns a large number of specialist provisions. Whilst posters are correct upthread in that you can’t run a school for profit, you can clearly run one and the parent company can make a large profit.

https://schoolsweek.co.uk/how-investors-are-making-millions-from-the-bankrupt-send-system/