Awful article, sadly the norm for the Guardian these days. It’s just saying that private schools can now offset vat on their expenses against the VAT they charge, like every other business out there.
It has been interesting watching their faux left London woke virtue signalling journalists get into a twist over this though. Surely they can’t be forced to send Tarquin and Jemima to a state school!
AnotherKTa on
Well yeah, if an organisation pays VAT then they also get to claim it back. You can’t have it both ways, despite what many people might have thought was going to happen.
ObviouslyTriggered on
Lal, called it here multiple times usually to the tune of a million downvotes, whilst charities had zero VAT on considerably more items than normal businesses a lot of capital expenditures were not zero rated so they paid full VAT on their expenditures.
And the bigger the school the more likely it is to have substantial capital expenditures that were not qualified for zero rating.
This means that some small independent school in the but fuck of nowhere will see zero benefit from the new VAT rules but schools like Eton that sit on endowments of half a billion pounds are going to be raking it in. Those schools are also the ones that most likely going to be able to eat the costs of the new VAT requirements because they’ll easily could offset that against what they’ll now be able to claim back.
The private education VAT charge was the least thought out policy I’ve seen in a long time. It didn’t change the charitable status of schools – they are still non-for-profit organizations, they do not pay taxes on income. It simply essentially created a weird new statue in which we have charities and VAT registered charities. The implication of that alone on things like accounting rules was insane and it was clear from the get go that it would introduce a gazillion of edge cases and unintended 2nd order effects.
Dedsnotdead on
I knew that the larger schools were pulling forward capital development in order to take advantage of the Vat rebate but I didn’t realise that they could claim for 10 years.
“They will also be able to now claim VAT back on operating costs and are developing significant capital projects on which they will also be able to claim the VAT back. In short, the taxpayer will now be funding 20% of their running costs and capital projects. It is a windfall gain to the privileged independent schools at the expense of the taxpayer.”
Twenty percent of running costs seems fair given that they are charging Vat on the fees. The larger schools are going to rinse the exchequer on capital expenditure.
pajamakitten on
The problem is that people do not understand how businesses operate with regards to VAT and claiming it back, so the policy sounded reasonable to them as they only understood that private schools would no longer be VAT-exempt. The issue has only become apparent now that people have realised there is a second part to the rule, so it is not what they thought it would be at all.
goldensnow24 on
Love this. Labour shooting themselves in the foot because “rich people bad”. Same thing will happen with the non dom policy, it will be a net cost to the exchequer.
But in classic labour fashion, it doesn’t matter if we all get poorer, as long as the rich get poorer (which isn’t even happening with these stupid policies lol, it’s just us getting poorer).
Kitchen_Durian_2421 on
Read each child attending a state school costs over £22k a year. If the parents of kids going to public schools are resident and paying tax in this country. Why don’t they take the government to the courts over discrimination? Possibly could go all the way to the ECHR think they could win. What the Labour government has done wouldn’t be allowed in EU countries. How much would it cost if the government had to pay the first £22k to public schools for every pupil they enrol.
7 Comments
Awful article, sadly the norm for the Guardian these days. It’s just saying that private schools can now offset vat on their expenses against the VAT they charge, like every other business out there.
It has been interesting watching their faux left London woke virtue signalling journalists get into a twist over this though. Surely they can’t be forced to send Tarquin and Jemima to a state school!
Well yeah, if an organisation pays VAT then they also get to claim it back. You can’t have it both ways, despite what many people might have thought was going to happen.
Lal, called it here multiple times usually to the tune of a million downvotes, whilst charities had zero VAT on considerably more items than normal businesses a lot of capital expenditures were not zero rated so they paid full VAT on their expenditures.
And the bigger the school the more likely it is to have substantial capital expenditures that were not qualified for zero rating.
This means that some small independent school in the but fuck of nowhere will see zero benefit from the new VAT rules but schools like Eton that sit on endowments of half a billion pounds are going to be raking it in. Those schools are also the ones that most likely going to be able to eat the costs of the new VAT requirements because they’ll easily could offset that against what they’ll now be able to claim back.
The private education VAT charge was the least thought out policy I’ve seen in a long time. It didn’t change the charitable status of schools – they are still non-for-profit organizations, they do not pay taxes on income. It simply essentially created a weird new statue in which we have charities and VAT registered charities. The implication of that alone on things like accounting rules was insane and it was clear from the get go that it would introduce a gazillion of edge cases and unintended 2nd order effects.
I knew that the larger schools were pulling forward capital development in order to take advantage of the Vat rebate but I didn’t realise that they could claim for 10 years.
“They will also be able to now claim VAT back on operating costs and are developing significant capital projects on which they will also be able to claim the VAT back. In short, the taxpayer will now be funding 20% of their running costs and capital projects. It is a windfall gain to the privileged independent schools at the expense of the taxpayer.”
Twenty percent of running costs seems fair given that they are charging Vat on the fees. The larger schools are going to rinse the exchequer on capital expenditure.
The problem is that people do not understand how businesses operate with regards to VAT and claiming it back, so the policy sounded reasonable to them as they only understood that private schools would no longer be VAT-exempt. The issue has only become apparent now that people have realised there is a second part to the rule, so it is not what they thought it would be at all.
Love this. Labour shooting themselves in the foot because “rich people bad”. Same thing will happen with the non dom policy, it will be a net cost to the exchequer.
But in classic labour fashion, it doesn’t matter if we all get poorer, as long as the rich get poorer (which isn’t even happening with these stupid policies lol, it’s just us getting poorer).
Read each child attending a state school costs over £22k a year. If the parents of kids going to public schools are resident and paying tax in this country. Why don’t they take the government to the courts over discrimination? Possibly could go all the way to the ECHR think they could win. What the Labour government has done wouldn’t be allowed in EU countries. How much would it cost if the government had to pay the first £22k to public schools for every pupil they enrol.