The government’s plans to impose VAT on private schools from January 1 next year may have to be postponed as unions, tax experts and school governors warn that meeting the deadline will lead to administrative chaos and teacher job losses, putting pressure on the state sector.
Relating to: Private schools say enrollments are down, mainly due to VAT on fees
The Treasury refused on Saturday night to confirm that a plan to impose 20% VAT on private school fees would be introduced from January 1, as chancellor Rachel Reeves confirmed in July, instead saying it would be “introduced as soon as possible”. ”.
Numerous organizations in the education sector, including those supporting the VAT principle, are calling for a delay until next September to give private schools more time to register for the new tax, assess its impact and adapt.
There are also concerns about the impact on the special educational needs and disability (Remit) sector if more state schools are forced to carry out Send assessments on students transferring from private schools.
Private school administrators say they cannot register for VAT because the plans are not yet included in the law and the budget is not valid until October 30.
Accountants and tax experts say organizations that typically have little tax expertise will have little time to comply. Invoices for the period starting in January are normally sent in December. Doubts over the timetable are growing after the Treasury was bombarded with calls for delays and demands for a proper impact assessment in responses to official consultations that ended last month.
In its response, the NASUWT teachers’ union said that while it shared the government’s desire to “remove barriers to opportunity” and recruit 6,500 more teachers into the state sector, it was concerned about the risk of redundancies and redundancies in the private sector. permanent job loss from the profession.
It recommends that an impact assessment should be carried out on the possible increase in Send assessments in the government sector and the level of service needed.
It says: “We request that a more reasonable time frame be offered to implement the change fairly and without undue disruption to teachers, students and parents.”
In its submission, the Association of School and College Leaders says: “We strongly recommend that the government undertake a comprehensive impact assessment and full consultation on these proposals before they are formalized in legislation, and delay their implementation until September 2025 at the earliest.”
Although the government does not intend to water down the content of the plan, any delay would be an embarrassment for the Treasury; The Treasury has already made clear that it is reconsidering parts of Labour’s manifesto plan to scrap non-Dom tax status due to concerns the reforms will continue. Bring less money than you expected.
There are concerns that planned changes to tax regulations for non-doms, aimed at raising extra money to be spent on public services such as the NHS, could lead wealthy foreigners to leave the UK.
The VAT scheme for private schools was one of Labour’s more eye-catching policies, as was the case for lays and their tax arrangements, and it said it would help pay for new teachers’ salaries, as well as free breakfast clubs in all primary schools.
Asked whether the plans could be delayed, the Treasury issued a statement from a government spokesman which did not directly address the question: “We want to ensure all children have the best chance of succeeding in life. Ending tax breaks for private schools will help raise the revenue needed to fund our education priorities for next year, such as hiring 6,500 new teachers.
“The government has carefully considered the representations on this policy and will publish a response to the consultation in the budget.” Sources said only that the plans would be implemented “as soon as possible”.
In its submission to the Treasury adviser, the Chartered Institute of Taxation, the UK’s leading professional body for taxation matters, said: “Neither HMRC nor [HM Revenue and Customs] nor will private schools be prepared to effectively implement the change in VAT liability from 1 January 2025.
“As there is currently no tax information, impact note or published guidance, the implementation date is January 1, 2025, effectively shortened by school closures in mid-December, we recommend that the implementation date be postponed accordingly.”
The Association of Tax Technicians said: “The proposed 1 January start date does not give schools or HMRC enough time to adequately prepare and submit the proposed changes. Starting in the middle of an academic year could also cause additional difficulties for schools and students. Starting in September 2025.” Its postponement should be taken into consideration.”
Julie Robinson, Chief Executive of the Independent Schools Council, said: “Even those in favor of introducing VAT on the independent sector say January 1 is not possible.”