Starmer's stubbornness

Private schools are currently not VAT registered.

What this actually means is that they pay VAT charged by their suppliers but they are unable to claim many of the VAT back and have to absorb it.

By becoming VAT registered they will be able to claim back the difference between the incoming/outgoing VAT however, as the VAT on fees is allegedly liable to be more than the schools incoming VAT bills they would end up having to pay the excess to HMRC.

(Hope that is clear, as I am wrangling a pre-schooler)

So, it comes down to semantics i.e. ‘they must invoice the customer.

It would appear that clever accounting (at which I’m sure private schools are very adept) will enable them to actually absorb some of the VAT cost rather than passing all 20% directly onto the customer - should they choose to do so.

Absorbing some of the cost is not, in itself, illegal then GSM.

GrannyGravy13

Glorianny you are wrong in this instance.

There were so many interactions between the independent schools, local schools and community, too many to mention.

👍

LizzieDrip

This from CT: Accountant Advisors (online):

“ Will parents be expected to pay the full amount of VAT?

This will depend on the school.

Independent schools will have to become registered for VAT following this legislation, so there will be a possibility for schools to recover VAT on capital and running costs. In turn, this could allow independent schools to absorb some of the VAT cost to be passed on to parents. Based on our understanding from working closely with private education clients, we understand that some schools are seeking to absorb some of the VAT cost and therefore the increase in fees will not likely be as high as 20%.”

Oo, must be some illegal activity going on there then

Nothing at all illegal going on. Someone else can explain how businesses can offset these amounts.

But, equally important, private schools won't be putting 20% vat on their minibus services, their breakfast and after school clubs, their catering, and most importantly not on their boarding fees either.

They will still have to invoice the parents for the VAT and pass it on to HMRC. Whether they have the means to refund part of the charge is another matter.

Glorianny you are wrong in this instance.

There were so many interactions between the independent schools, local schools and community, too many to mention.

This from CT: Accountant Advisors (online):

“ Will parents be expected to pay the full amount of VAT?

This will depend on the school.

Independent schools will have to become registered for VAT following this legislation, so there will be a possibility for schools to recover VAT on capital and running costs. In turn, this could allow independent schools to absorb some of the VAT cost to be passed on to parents. Based on our understanding from working closely with private education clients, we understand that some schools are seeking to absorb some of the VAT cost and therefore the increase in fees will not likely be as high as 20%.”

Oo, must be some illegal activity going on there then

Obviously you don’t know how much assistance independent schools give to state schools children whose parents can’t afford fees Glorianny. Unfortunately you don’t understand the legal meaning of charitable status. I have already posted a link. Independent schools do not pretend to be charities. If registered with the Charity Commission they are charities.

GrannyGravy13

Glorianny

The state school system is suffering from massive underfunding and shortages. It needs huge investment.
Meanwhile schools in the private sector pretend to be charities and don't pay VAT.
If they want to continue doing so why not lay down certain rules? So perhaps teachers have to commit to spending one day a week in a state school. The school has to sponsor members of staff in a state school. Or it could supply funding for breakfast clubs or after school clubs. 6th formers have to spend so many hours per term assisting in an inner city school.
Children identified as gifted could visit the school for extra tuition.

It would all of course be a massive undertaking to sort out. But unless they are made to fulfill some charitable obligations I really cannot see why these schools should have charitable status.

The fee paying schools our children attended had free places for gifted children along with paying for their uniforms, books etc..

But that isn't really a charitable act is it? Perhaps if 20% of the children attending were on free places it might be considered such. But I can't think of a single charity that only benefits a few select people.

Yes, they must invoice the parents for the full amount of VAT payable on the fees

OK, fair enough. I’m enlightened - still fine with the policy though.

Sorry posted to soon, these children would not have been able to attend otherwise, and nobody was aware who they were so they could not be singled out by their peers.

Glorianny

The state school system is suffering from massive underfunding and shortages. It needs huge investment.
Meanwhile schools in the private sector pretend to be charities and don't pay VAT.
If they want to continue doing so why not lay down certain rules? So perhaps teachers have to commit to spending one day a week in a state school. The school has to sponsor members of staff in a state school. Or it could supply funding for breakfast clubs or after school clubs. 6th formers have to spend so many hours per term assisting in an inner city school.
Children identified as gifted could visit the school for extra tuition.

It would all of course be a massive undertaking to sort out. But unless they are made to fulfill some charitable obligations I really cannot see why these schools should have charitable status.

The fee paying schools our children attended had free places for gifted children along with paying for their uniforms, books etc..

The state school system is suffering from massive underfunding and shortages. It needs huge investment.
Meanwhile schools in the private sector pretend to be charities and don't pay VAT.
If they want to continue doing so why not lay down certain rules? So perhaps teachers have to commit to spending one day a week in a state school. The school has to sponsor members of staff in a state school. Or it could supply funding for breakfast clubs or after school clubs. 6th formers have to spend so many hours per term assisting in an inner city school.
Children identified as gifted could visit the school for extra tuition.

It would all of course be a massive undertaking to sort out. But unless they are made to fulfill some charitable obligations I really cannot see why these schools should have charitable status.

Yes, they must invoice the parents for the full amount of VAT payable on the fees.

So, it would be illegal for a private school to absorb some of the VAT cost, rather than pass that cost onto the customer?

Am I interpreting that correctly GrannyGravy and GSM?

Rosie51

Whitewavemark2

I understood the exact opposite.

That an exemption is in place for children with these plans.

I’ll get back on this

I thought Sarnia was saying pupils without an EHCP wouldn't be exempt from VAT, she says children with a plan will be exempt. The problem is getting an ECHP is not easy, nor speedy. My own grandson, who is completely state taught at a special school for children with complex special needs, took ages to get one. It took a lot of persistence by his mother to speed things up to even a snail's pace.

There was someone on the radio this morning saying that many people have paid quite a lot of money to have their children privately assessed to try to speed up the process, otherwise the child falls further and further behind whilst they are waiting in the queue for an EHCP.
In my GD's current state primary school there are at least five children in her mainstream year who have EHCP's because of their autism and the school gets some additional help. However the extra help is really not the equivalent of being in a specialised school and more than one parent is desperately trying to find somewhere else. My GD's last school contained a very over-subscribed special unit for children with autism.

Exactly. I hope Lizzie is now enlightened.

LizzieDrip

I still don’t understand WHY private schools appear to be passing all the VAT cost directly on to their paying customers! And WHY their paying customers (the parents) aren’t challenging them on this?

If I had a child at a private school, my first port of call would be to question the Headteacher as to WHY they apparently can’t manage their finances in a such a way that, at least, some of this cost can be absorbed by the school🤷‍♀️

I don’t get it. Maybe I’m missing something - please can someone enlighten me!

If private schools are made to register for VAT they have to charge VAT on their invoices (term bills) as all companies who are registered have to.

Not to do so would be illegal.

Only a charity can be registered as such Cossy.
www.gov.uk/government/publications/what-makes-a-charity-cc4/what-makes-a-charity-cc4

Btw, Sarnia, the state system isn’t always “second-best” many many children so well.

Notwithstanding this, why do you it’s ok for most of us to “put up with second-best” for our own children and grand-chikdren?

For goodness sake, I know very few people who can actually afford to educate their children privately, particularly at secondary level.

Independent schools are NOT charities, even though they are registered as such.

Back in the day, when there were far fewer independent schools, many good bursaries and scholarships were available to bright “working class” pupils. Though they got a “better more rounded and privileged” education, many scholarship boys had a miserable time, not fitting in with their peers at school or at home.

I have no issue whatsoever with parents choosing private nurseries and private education, just be prepared to pay the full fees and the VAT.

Many parents will keep their children in these schools, those that have to transfer into the state system, and I’ve know a few over the years, will adjust and can do just as well.

Whilst I agree Education needs reform and far more funding, my daughter’s school has just made 6 LSA’s redundant (or not continued their contacts), purely based on budgetary restraints.

She will have a year 1 class next year of 33, she’s moving up alongside her current reception class for continuity, without including her 7 SEN children (only one fully assessed and funding and he has a 1-2-1 LSA, but she now has no class LSA), all her class bar the aforementioned have hit their personal targets and are moving up with confidence.

One of my daughters went to a private secondary school, they used to take girls free if they did very well in the entrance exam but could not afford to pay - this was funded by the local authority but I can't remember the name of the scheme.
The policy was discontinued in the 1990's and our school raised several million pounds so that they could continue to offer free places, but they could only use the income on the funds so could only take a couple of pupils per school year.
I do appreciate that many of the parents at private schools are very wealthy and could well afford an extra 20%. However private schools do everything they can to keep fees low as some parents struggle to raise the fees. Not every parent is wealthy by any means and I feel for those who have gone without holidays, cars, lived in very small properties and existed very frugally, all to fund the cost of private education. They won't be able to keep their children at the schools.
I doubt very much that teachers will flock back to the state sector, there is already a shortage of science teachers in both state and private schools and working in a comprehensive is not a very attractive proposition at the moment.
State schools will have to take additional students if there is room - which is certainly not guaranteed, particularly in those which score better in inspections. I've no idea what will happen if there is simply not room for everyone.

Oops sorry typo Joseann not Josesnn🙈

They are a business, like any other

Precisely Josesnn!

Private schools aren't applying a flat 20% increase to the fees LizzieDrip. They are working hard to make a distinction between what is education and what is childcare so that parents aren't overburdened with costs. Some of the costs will of coursebe absorbed.
However, don't forget hat private schools need to increase their own fees yearly anyway. They are a business, like any other, they have budgets and a lot of their outgoings have increased recently too.