VAT on Private Schools poll

[duncs500]

Do you think it's unfair that some people have more money than others though?

90% of people with money worked hard and made smart decisions in order to get that, and I'm talking about the majority that earn a good salary and pay taxes (it's easy to focus on the top 1% with a lot of wealth, but they are clearly not a large group of people). The income tax system should and does deal with ensuring that they pay a bigger contribution which is fine. Do we have to design the tax system so that they pay more for absolutely everything. Are we really trying to send the message that we want to kill any ambition to try and be successful?

[ZedLeg]

I’m going to need a citation on that 90% number

I don’t think it's unfair for some to have more than others as a general principle. I do think the way that wealth is distributed now is incredibly unfair and we should be taking steps to address the balance. Taxation is generally how that’s done.

Really been drinking that taxpayer alliance kool aid though Duncs.

[Rich B]

Do you think it's unfair that some people have more money than others though?

90% of people with money worked hard and made smart decisions in order to get that, and I'm talking about the majority that earn a good salary and pay taxes (it's easy to focus on the top 1% with a lot of wealth, but they are clearly not a large group of people). The income tax system should and does deal with ensuring that they pay a bigger contribution which is fine. Do we have to design the tax system so that they pay more for absolutely everything. Are we really trying to send the message that we want to kill any ambition to try and be successful?

well you have to pick a certain level to move forward as a society, and basing an even level on what the poorest can afford wouldn't work.

Like if you moved in with a girlfriend/boyfriend who earns significantly less than you, but you still insisted on splitting the bills 50/50. It will severely restrict what you can do as a whole. You could have £10k a month left over and they could be going into debt every month.

What's the solution - do you cut both of your lifestyles heavily to suit their income or do you try to balance it out so you pay more and you both end up with a better quality of life?

I don't particularly want a fucked NHS, pot holes roads, polluted rivers and all the rest of the crap that's come from cutting services continually. I'd happily pay more to improve these things.

The Tory manifesto has another £19billion of cuts to services - so they're basically guaranteeing it all getting worse - all to grab a few "reducing tax" headlines!

[IanF]

Only one of my schools has mentioned the increase, all generalised about absorbing part of the increase, using bursaries to assist people with children already at the school (rather than allowing poorer children to come when they have a need, I suppose), offsetting, different payment plans…. Plus this particular one is owned by a church, so potentially may keep their exemption, unless Starmer plans to go after Churches aswell? If this last proves effective, I imagine there’ll be a lot of that. (Eton has its own church fwiw)

It won’t be quick or easy to implement, so don’t expect the money to start flowing into state schools any time soon (or ever).

Besides, like most Manifestos, they’re not worth the paper they’re written on especially once the reality of the implementation hits home.

ETA: I think all education should be tax free, as education generally improves society.

[Rich B]

using bursaries to assist people with children already at the school (rather than allowing poorer children to come when they have a need, I suppose),

have they said this in the literature or is this just standard "you'll only be hurting yourselves if you make us pay more" tactics?

Like the whole "if you make the mega rich pay more taxes they'll just move abroad and take the taxes they do pay with them"

Or

"We have to pay water company bosses massive bonuses for polluting the rivers because if we don't we'll get even worse bosses".

Etc...

It basically sounds like as businesses, they're finding methods to keep their customers by not just passing on a flat 15/20% rise.

[Sundayjumper]

The last point I’ll make is from a discussion today with a fellow partner (from our tax team) - fees charged may not necessarily increase by 20% if VAT is applied. The reason being is that savings could be made by claiming VAT on expenses, thereby reducing outgoings. It may be that the fee increase is ‘only’ 10%, for example.

I had considered that and I’m not sure it’ll help as much as that, they’d need fully half of their costs to be VATable. The main cost has to be payroll, and there’s obviously no VAT on employees. Books generally no VAT. FM could be a saving if it’s outsourced rather than employing a team directly. As long as the FM provider doesn’t take it as an opportunity to raise their prices ! Purchase or lease of IT & other capital items - yes. Interest payments on mortgage or general borrowing - no.

I’ll stick my neck out and say 10% is optimistic but 15% might be possible.

[Sundayjumper]

using bursaries to assist people with children already at the school (rather than allowing poorer children to come when they have a need, I suppose),

have they said this in the literature or is this just standard "you'll only be hurting yourselves if you make us pay more" tactics?

I imagine the first bit was said out loud, the second bit in brackets being the fairly obvious outcome if they need to balance the books.

And are they really a business ? They have customers of course but do they pay big bonuses to head teachers and dividends to shareholders ? Genuine question. I’d rather assumed they were more of a non-profit type arrangement.

[Rich B]

using bursaries to assist people with children already at the school (rather than allowing poorer children to come when they have a need, I suppose),

have they said this in the literature or is this just standard "you'll only be hurting yourselves if you make us pay more" tactics?

I imagine the first bit was said out loud, the second bit in brackets being the fairly obvious outcome if they need to balance the books.

And are they really a business ? They have customers of course but do they pay big bonuses to head teachers and dividends to shareholders ? Genuine question. I’d rather assumed they were more of a non-profit type arrangement.

sounds like you'd know better? They are businesses though.

I love the reaction to the idea -

Labour: "we need to raise more money to improve state schools by making private schools pay VAT."

People with kids in private schools and the schools: "I bet I can avoid this by getting our accountants to claim back VAT on everything".

[Sundayjumper]

And are they really a business ? They have customers of course but do they pay big bonuses to head teachers and dividends to shareholders ? Genuine question. I’d rather assumed they were more of a non-profit type arrangement.

sounds like you'd know better?

I don't, that's why I asked. But thanks for conspicuously not answering the question

Unless you think I'm employed by or receive dividend payments from a school, in which case double

The whole thing is based on "waaaaaahhhhh it's really unfair eat the rich this will definitely work". It won't work. It either won't happen, or it will make no positive difference to state schools. Feel free to bookmark and quote me on this

[Sundayjumper]

People with kids in private schools and the schools: "I bet I can avoid this by getting our accountants to claim back VAT on everything".

People with kids in private schools - this would be obvious fraud as it's not a business expense.

The schools - yes, they would be able to reclaim input VAT, that's exactly how VAT works.

[Beany]

I'm still very much of the opinion that it's just a headline grabber and it'll never happen.

"Look at us, we're performatively punishing the more wealthy, which we probably won't do, but even if we're forced to implement it so we don't look like we're fibbing in manifestos (because that's what the nasty tories do!) we'll water it down so fucking much as to be meaningless and we'll put it through before a bank holiday weekend when no-one will notice, vote for us, you poors" etc.

[Rich B]

And are they really a business ? They have customers of course but do they pay big bonuses to head teachers and dividends to shareholders ? Genuine question. I’d rather assumed they were more of a non-profit type arrangement.

sounds like you'd know better?

I don't, that's why I asked. But thanks for conspicuously not answering the question

Unless you think I'm employed by or receive dividend payments from a school, in which case double

The whole thing is based on "waaaaaahhhhh it's really unfair eat the rich this will definitely work". It won't work. It either won't happen, or it will make no positive difference to state schools. Feel free to bookmark and quote me on this

incredibly, I don't have the answer either.

I think it will happen - though I am concerned that the money won't find its way to where it should. - feel free to bookmark me in this (not sure why this is important, we're only randoms chatting on line - not the chancellor of the exchequer!)

[Rich B]

People with kids in private schools and the schools: "I bet I can avoid this by getting our accountants to claim back VAT on everything".

People with kids in private schools - this would be obvious fraud as it's not a business expense.

The schools - yes, they would be able to reclaim input VAT, that's exactly how VAT works.

thanks Steve.

[Rich B]

I had considered that and I’m not sure it’ll help as much as that, they’d need fully half of their costs to be VATable. The main cost has to be payroll, and there’s obviously no VAT on employees. Books generally no VAT. FM could be a saving if it’s outsourced rather than employing a team directly. As long as the FM provider doesn’t take it as an opportunity to raise their prices ! Purchase or lease of IT & other capital items - yes. Interest payments on mortgage or general borrowing - no.

I’ll stick my neck out and say 10% is optimistic but 15% might be possible.

Just re-read - this maths has already been done and is already part of the main discussion (hence I keep saying 15% and not 20%.)

"The Institute for Fiscal Studies (IFS) has written a comprehensive report into this subject. It found that adding VAT to school fees would lead to a net increase of 15 per cent, after VAT deductions had been taken off."

[Rich B]

Interesting piece to carry on the discussion!

https://westcountryvoices.co.uk/taxing- ... %20account.

[DeskJockey]

That's a very interesting article. I think it answers all the challenges (or most anyway) posed here.

And for a thought experiment. If you think having to pay VAT on top of school fees would make you put your child in a state school, have you considered offering the school the fee you would have otherwise paid (minus the VAT increase)? Ten parents doing that at the average cost per term (facilities aside), and you'll have paid for several teachers and TAs to bolster the ranks and help the local state school.

Having just finished a three year stint as chair of our (registered charity) PTA I can tell you raising 10-12k/year is hard work (our area is fairly average for London), but what we achieve with it is significant. You'd think that a sum like that wouldn't make much difference in a school with 400+ pupils, but it does.

[V8Granite]

I’d certainly not stretch myself, push my retirement age back, reduce my financial security to give the fees to a public school.

I would though pay for individual items in the hope they round up my kids exam scores and not down

Dave!

[Mito Man]

Flip it around, on the other thread it was said that it costs £7000 to educate a child in a state school per year.

So by sending a child to a private school, you're giving up a £7000 annual tax break. Perhaps those paying VAT on private schools could instead have a £7000 rebate.

[Sundayjumper]

"Look at us, we're performatively punishing the more wealthy...

It's not even that ! It's "we're performatively punishing the type of person that sends their children to private school".

If it was just about income or wealth (not necessarily the same thing) you could do it far more cleanly through income tax, Mito's probably unworkable mansion tax, or maybe even some kind of super-VAT on luxury items ? Dunno. Taking aim at private schooling seems transparently ideologically-driven.

Not sure if we already covered this angle, but I assume the VAT proposal will also apply to private faith schools ? Let's chuck a jerry can of racism onto this bonfire of an argument

[mikeyb]

The last point I’ll make is from a discussion today with a fellow partner (from our tax team) - fees charged may not necessarily increase by 20% if VAT is applied. The reason being is that savings could be made by claiming VAT on expenses, thereby reducing outgoings. It may be that the fee increase is ‘only’ 10%, for example.

I had considered that and I’m not sure it’ll help as much as that, they’d need fully half of their costs to be VATable. The main cost has to be payroll, and there’s obviously no VAT on employees. Books generally no VAT. FM could be a saving if it’s outsourced rather than employing a team directly. As long as the FM provider doesn’t take it as an opportunity to raise their prices ! Purchase or lease of IT & other capital items - yes. Interest payments on mortgage or general borrowing - no.

I’ll stick my neck out and say 10% is optimistic but 15% might be possible.

10% might be optimistic but I suppose it’s a decision each school will take.
You’d be surprised on what costs a school suffers on which VAT could be claimed back. Eg: IT equipment, premises costs, maintenance, training, marketing etc. I’ve just cherry picked items from a set of accounts I’m looking at now.

I know our VAT partner and audit partners are looking at this for our clients. I’ll feedback once I know more.