Up front school fees could avoid VAT

  • 30th October 2023

Private schools are informing parents that they can save thousands of pounds by paying school fees in advance of Labour introducing them, should they win next year’s general election, The Sunday Times has reported,

The Independent Schools Council has rejected the notion that such pre-payment schemes are a tax loophole.

Nick Hewlett, the head of St Dunstan’s College, a co-educational independent in Catford, Southeast London, said: A potential form of mitigation is for parents to make use of our existing fees in advance scheme. This is not a new initiative, having been in place for many years and the discount offered remains the same as previously.

“We did not encourage parents to use the scheme and we did not give either financial or legal advice.”

In a newsletter to parents, Merchant Taylors’ School in Three Rivers, Hertfordshire stated: “Efforts will continue so that the school is prepared for the political and economic changes that are emerging. Our fees in advance scheme may provide parents with a degree of long-term assurance in the current climate.

The Independent Schools’ Bursars Association warned however that Labour could change the rules to levy VAT at the point the money is spent rather than when it was handed over, meaning VAT could be levied even if the fees had been paid for in advance.

The ISBA stated: “There is still a lack of detail around Labour’s policy and so schools cannot yet advise parents on any specifics.”

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