Charitable status and private schools

DAR, I said ‘what they believe to be the best education’.

ALL fee paying independent schools ARE elite, some are far more elite than others, but the point is Mr&Mrs Average could not afford to educate their children privately, especially at Secondary Level, it’s not just the fees, it’s also all the extras plus uniform and school trips. We are an elitist country still and still have a class and income divide. As I said earlier I have experience of the independent school system between the ages of 3-13 as my son attended, with the help of a scholarship and my parents, a very nice prep school, the advantages were clear to see, much smaller classes, average of 12-14, much nicer facilities, more advantages to take part in great extra curriculum activities, great school trips and on the whole 60% of both pupils and parents, were great people, however having money doesn’t equate with “posh” or “class” or “manners” and the one-upmanship was hilarious and some pupils were just spoilt brats. Many were absolutely lovely though and parents were very good to my son as I worked full time and they all rallied round for the school run. It’s just sad that our state schools are run into the ground, and my daughter currently teaches a reception class of 34 children, it’s simply not a level playing field, which frankly it should be, all schools should offer all children the same chances irrespective of their parents/grandparents incomes

ronib

MaizieD but then of course all VAT registered businesses are able to recover the VAT which they have paid … so I guess there might be some careful calculations to be made. There might be a profit to the public schools under this new accounting system ?

The way VAT works is for the input tax (reclaimed from purchases etc) to be deducted from the output tax (charged on sales/fees) and the difference paid over to C & E or reclaimed. If a VAT registered business is viable then the normal outcome is for C & E to receive some money. In normal circumstances if there is a VAT refund it is usually because a large purchase has been, such as equipment.

ronib

And LizzieDrip parents with their own companies might be able to pay school fees through their company and reclaim 20 percent VAT so interesting times ahead.
After all the State pays for children of diplomats etc to be educated at boarding schools so can’t see why creative accountants can’t dream up new schemes for companies…. particularly where parents are employed overseas.

If they did that they would be charged income tax on the benefit.

Dinahmo yes parents would be charged income taxes on the benefit and presumably it could be divided into two in the case of a two parent family?

Remember Ton Blair winning an election on Education Education band wagon and it was disaster. Looks like Starmer will hit those parents working hard to pay for their children's education. Obviously it would be better if the state could provide the same level of education and facilities as the private sector but realistically this is not possible. Most private schools have scholarships, which hopefully children benefit from so the charity status is justified. There is no way schools could cope wit the extra numbers if a lot of parents are forced to put their children into the state system. some of my GC go to private schools - parents are not rich but children have needs that could not be met in the state system. Wish I could have afforded to put my children into private schools when they were younger.

Utopia Cossy. It isn’t going to happen, whatever the colour of the government.

ronib

Dinahmo yes parents would be charged income taxes on the benefit and presumably it could be divided into two in the case of a two parent family?

Depends whether both parents are employed (even directors re employees) by the company.

I've never quite understood why some parents take on additional jobs in order to pay school fees. I realise that they want their children to get the best out of life but that can be achieved in other ways. I would have thought that spending money on cultural activities or foreign travel or theatre outings would broaden a child's horizons.

Germanshepherdsmum

Utopia Cossy. It isn’t going to happen, whatever the colour of the government.

One person’s Utopia is somebody else’s Dystopia as far as education is concerned.
One challenge which isn’t often mentioned is the disparity between different state schools. Birds of a feather flock together in the state system, so some schools attract the best teachers, have very successful fund raising, high levels of parent engagement, excellent academic results, etc.etc. - and others don’t. That’s probably a very hard nut to crack too, it’s not just private schools which are ‘elite’.

DaisyAnneReturns

It us already the case that charities are not exempt, because of their charity status, from paying VAT. They can claim various reliefs and concessions, however.

Independent schools are exempt from the requirement to charge VAT on school fees because the provision of education by an 'eligible body' is an 'exempt' supply for VAT purposes under current VAT legislation. This legislation covers private tuition, Univerities, etc.

It seems to me that Starmer has and is carrying out due diligence on this, while, in the press and social media, prejudice, as always, often overrides thruth.

This is true. VAT is not payable on educational services and goods. It was EU law and could be changed but Starmer has said he wants to stay in line with EU law. In any case it would still be complicated applying VAT to private school fees and not any other kind of educational provision eg private tutoring.

Fail to understand why a large public school near me has charitable status. Its assets, land and properties must run into billions. I have never heard of them doing anything charitable in adjacent poorer boroughs.

The Government of the day regardless of its colour can improve state school standards whilst leaving fee paying schools alone.

People don't always get to hear about the partnerships between independent schools and state schools.
Like:
Inviting pupils to attend lessons and workshops
Hosting joint drama and music events
Inviting pupils to attend performances, concerts and assemblies
Having members of staff serving as governors at state schools
Hosting exams like LAMDA

just a few, without even mentioning sports and academic partnerships.

"In 2022–23, average private school fees across the UK were £15,200 in today’s prices (net of bursaries and scholarships). This is £7,200 or nearly 90% higher than state school spending per pupil, which was £8,000 in 2022–23 (including day-to-day and capital spending). The gap between private school fees and state school spending per pupil has more than doubled since 2010, when the gap was about 40% or £3,500."

Please correct my maths if I'm wrong...
x goes to private school and their parents pay £15,200 per year. x's parents save the taxpayer £8000 per year for state education.
Labour put VAT on private school fees and x's parents can no longer afford to pay the fees. x now has to go to a state school at a cost to the taxpayer of £8000 per year. The treasury will not be in receipt of any VAT payments from x's parents.
Extra cost to the taxpayer £8000.
In addition, private schools PAY VAT on all the goods and services they buy. IT equipment, new buildings, educational supplies. So if they have to close, the exchequer will not be receiving this money either.
The vast majority of private schools are not like Eton, Harrow, Westminster etc. They are not elitist and provide excellent education with pupils leaving to become badly needed doctors, engineers, lawyers etc. I could go on, but believe me, most are brilliant schools and many parents make substantial sacrifices so that their children can attend.

penny hapenny Keir Starmer has suggested that when parents take their children out of private schools, they free up the funds to spend in the wider economy so money is circulated around.
That’s making quite a few assumptions about spending patterns which have no basis in reality. But why am I not surprised?
Seems to me that freedom is going to be reduced even further under Keir so that parents and families are simply providing VAT income in a very over taxed economy/society.

I think Keir Starmer might just be underestimating the reactions of x's parents. Instead of withdrawing their child fron private school, the parents might .....
Reconsider the house move they were planning
Put on hold that new kitchen or bathroom, or building extension
Forgo holidays
Eat out less, buy fewer treats etc.
ie. spend far less on things which would normally boost the economy.
The big thing in all this is that once x and his parents have had a taste of the private sector, they will be very reluctant to let it go.
We just can't predict anything, and in my experience, an emotional reaction might well override the perhaps more sensible decision to transfer x into the state system.

It’s not an economic argument it’s idealogical, those that feel strongly about abolishing private schools are going to vote Labour or Liberal anyway. So there is no money to be had, no votes to win, and many other policies that are much more important.

Well Labour just lost my vote.

ronib

Well Labour just lost my vote.

You, and potentially 2 million other voters on this one.

I couldn’t vote for a party that had this in its manifesto.

I'm not saying it was or wasn't but why do you see Tony Blair winning an election on Education, Education, Education as a disaster, dizzygran? Just saying it doesn't make it so. Could you explain?

ronib

Well Labour just lost my vote.

No manifesto will ever totally accord with any voter, and people will weigh up all the good and bad (for them) elements of each party’s proposals. This isn’t going to be the bomb that sinks Labour, it’s just not important enough to enough people compared with other issues.

Casdon

ronib

Well Labour just lost my vote.

No manifesto will ever totally accord with any voter, and people will weigh up all the good and bad (for them) elements of each party’s proposals. This isn’t going to be the bomb that sinks Labour, it’s just not important enough to enough people compared with other issues.

I totally agree that this is small fry for most of the electorate.

For me it is on the slippery slope of gradual elimination of choice for parents regarding their children’s education.

Will Labour go after Private Healthcare next?

I don't think people expect "Utopia" GSM. They simply want us to do our best for everyone. Some just want "a fairer society" and some are beginning to see that, poor health, lack of lifetime learning oportunity, lack of homes and enough to live on, affect the whole of society.

In other words running a country the way we are affects us all negatively and even the comfortable Conservative will eventually realise this. Too late of course but hopefully others will have done something about it.