Reply to: VAT on school fees (if Labour win)

[eek]

And all these people pulling kids out of private schools will turn up at the good state schools with lawyers. They will then drive a coach and horses through the schools admissions policy. Kids that would get to go to a good state school just now, will be pushed into the poorer performing state schools.

All in all a retrograde step. All my kids were entirely state educated so I haven't got an axe to grind.

Sorry but any half decent school is subjected to lawyers every year already as people try to get in via appeal - adding lawyers won’t get them anywhere as any half decent school would have seen every possible attempt done some time in the past.

[Acme Thunderer]

And all these people pulling kids out of private schools will turn up at the good state schools with lawyers. They will then drive a coach and horses through the schools admissions policy. Kids that would get to go to a good state school just now, will be pushed into the poorer performing state schools.

All in all a retrograde step. All my kids were entirely state educated so I haven't got an axe to grind.

[fiisch]

If VAT is added I will have to take my kids off the private schools as it will be unpayable for me and send into government education. Like me there will be many others. Where will labour create these places and how are they going to pay for them, it is a shot in their own foot.

Same boat, and I'd suggest about half the children in my eldest daughter's year of 30-odd kids would follow.

Another cheap Labour attempt to grab votes without actually thinking the policy through.

[Eirikur]

If VAT is added I will have to take my kids off the private schools as it will be unpayable for me and send into government education. Like me there will be many others. Where will labour create these places and how are they going to pay for them, it is a shot in their own foot.

[WTFH]

Does it mean that the offshore tax-haven trust that might be paying for JRM’s x+1 children will be able to claim VAT back on their education?

[Smartie]

Many public schools are already businesses so already charge VAT.

It's pretty difficult to make a serious argument that the others are 'charities' and deserve the tax break. A bit of outreach and scholarships, mostly for show.

The time of working/middle class parents forgoing holidays and new cars to put their kids in these schools is largely over.

Inflation on public school fees has been high over the past couple of decades as parents demand more and better facilities.

As a result, you'll need (in London) £20k after tax per year plus a few thousands more for uniforms, school trips, activities and special needs support. For 2 or 3 kids, or more.

Customers are often wealthy international business types.

No-one believes that half a million kids or more are suddenly going to end up in the state system.

The obvious argument for the policy is that the fewer of our politicians that can afford to send their kids to public school, the more likely they are to fight to improve the state system.

[malvolio]

Quite a lot of people I've worked with in London over the years sent their kids to a private school, purely because the local state schools were so grim. They were well paid but not wealthy, in most cases they didn't want to have to do it, it cost them a huge amount of money, but the state wasn't delivering.

I personally disagree with private education for various reasons, but I also think it's unreasonable to penalise it unless the state-provided alternative is adequate.

The government is relieved of the cost and logistics of educating around 600,000 kids every year, in return for which they forgo a small percentage of that cost in a few tax breaks. In 2018 the cost to government of putting a child through the UK state educational system (primary & secondary) was estimated at around £73,000, I suspect it's far higher now. So 600k kids in private schools may have saved the UK taxpayer a gross amount of up to £44bn over their entire school career. Have the government used the extra cash they didn't have to spend on those 600k kids per year, to improve and elevate the state system so that more parents would feel happy not using private education?

Labour know as well as anyone else that if they make private education unaffordable for many parents, the state schools will quickly become even more oversubscribed and they'll end up with a real funding headache. So IMHO this is all just lip service to their more traditional supporters.

I also hear the Pope tends to the Catholic religious viewpoint...

Don't make the mistake of thinking that Labour has any kind of monetarist economic awareness. History has proved that all they know is tax and spend and "cost vs value" is an alien concept. You might also spot they appear to have spent the VAT recovered by this particular exercise at least three times.

The real problem now is that the Tories are pursuing the same basic economic approach... Bring back the disciples of Lawson!!

[Snooky]

Quite a lot of people I've worked with in London over the years sent their kids to a private school, purely because the local state schools were so grim. They were well paid but not wealthy, in most cases they didn't want to have to do it, it cost them a huge amount of money, but the state wasn't delivering.

I personally disagree with private education for various reasons, but I also think it's unreasonable to penalise it unless the state-provided alternative is adequate.

The government is relieved of the cost and logistics of educating around 600,000 kids every year, in return for which they forgo a small percentage of that cost in a few tax breaks. In 2018 the cost to government of putting a child through the UK state educational system (primary & secondary) was estimated at around £73,000, I suspect it's far higher now. So 600k kids in private schools may have saved the UK taxpayer a gross amount of up to £44bn over their entire school career. Have the government used the extra cash they didn't have to spend on those 600k kids per year, to improve and elevate the state system so that more parents would feel happy not using private education?

Labour know as well as anyone else that if they make private education unaffordable for many parents, the state schools will quickly become even more oversubscribed and they'll end up with a real funding headache. So IMHO this is all just lip service to their more traditional supporters.

</rant>

[jamesbrown]

Sadly not - the loophole doesn't work as VAT is still chargeable when there is a personal benefit.

However:

1). It's a silly Labour soundbite saying they'll charge VAT on school fees they've been trotting out since the 90s as a way to win cheap votes.

2). They'd alienate (or even are alienating) some of their existing voters, especially those who aren't wealthy but send their kids to private school courtesy of bursaries/scholarships and the like. What happens to the kids currently attending private school whose parents just afford it, but couldn't cover the extra 20%? Where are the spaces in the state system to educate the children who would have gone/did go to private school but whose parents can no longer afford it?

The more likely workaround to escape the VAT charge will be to fund future school years up front if possible, so to "pay off" the remainder of the child's fees before the legislation is put into action.

I think this is a rather optimistic take given that Labour has been exploring anti-avoidance measures too, such as making the VAT chargeable when the education is received.

[northernladuk]

As ever the idiot comes along to stick his oar in.

I'm the idiot? That's rich. You ask daft questions in prof you'll get short shrift. Own it.

[fiisch]

Sadly not - the loophole doesn't work as VAT is still chargeable when there is a personal benefit.

However:

1). It's a silly Labour soundbite saying they'll charge VAT on school fees they've been trotting out since the 90s as a way to win cheap votes.

2). They'd alienate (or even are alienating) some of their existing voters, especially those who aren't wealthy but send their kids to private school courtesy of bursaries/scholarships and the like. What happens to the kids currently attending private school whose parents just afford it, but couldn't cover the extra 20%? Where are the spaces in the state system to educate the children who would have gone/did go to private school but whose parents can no longer afford it?

The more likely workaround to escape the VAT charge will be to fund future school years up front if possible, so to "pay off" the remainder of the child's fees before the legislation is put into action.

[BlueSharp]

No it wouldn't. An apprentice can't be in full time education. It might provide some amusement when you make yourself the laughing stock but that's all.

As ever the idiot comes along to stick his oar in.

[northernladuk]

It would make for an interesting argument taking them on as an apprentice and claim 95% back from the government. ;-)

No it wouldn't. An apprentice can't be in full time education. It might provide some amusement when you make yourself the laughing stock but that's all.

[BlueSharp]

If you can justify it as a cost wholly and exclusively related to your company's trade, then yes.

Sadly, you can't.

Where did you get the idea that YourCo is merely a glorified piggy bank I wonder...

I suspect you can claim the VAT but the supply of the (school) service would have to have VAT added back onto it making it tax-neutral, so no benefit, and the VAT is included in the BIK calculation. So not worth doing.

It would make for an interesting argument taking them on as an apprentice and claim 95% back from the government. ;-)

[malvolio]

If Labour win I will ask my accountant, but thought I would ask here first.


Is there any benefit to paying the BIK on my company paying the school fees directly and allowing the company to reclaim the VAT?

If you can justify it as a cost wholly and exclusively related to your company's trade, then yes.

Sadly, you can't.

Where did you get the idea that YourCo is merely a glorified piggy bank I wonder...