Private schools face a double VAT raid under new Labour plans

Private schools face a double VAT raid under new Labour plans that that would stop them reclaiming tax on receipts

  • Labour is planning to change rules so schools can’t make historical VAT claims 

Private schools face yet another squeeze on budgets under new Labour plans that would stop them reclaiming tax on receipts.

If Labour wins the next general election, independent schools would be blocked from claiming back money spent on VAT for certain goods, services and building projects.

Under the current rules, private schools cannot claim the value added tax back on receipts because they are already VAT exempt.

They would be able to do so if forced to become VAT-registered under Labour’s plans to tax private school fees. But Sir Keir Starmer is planning to change the law to block schools making historical claims, the Daily Telegraph has reported.

Education leaders last night warned that parents face bearing the brunt of the additional costs.

In addition to taxing private schools, Labour is planning to also change the law to stop them from being able to claim back VAT for money spent on building projects and certain goods and services

A senior source said: ‘It’s clear that Labour hasn’t thought through the practicalities of its punitive tax. Most independent schools are small and will be looking for any way possible to ease the burden of a 20 per cent tax on parents.

‘The majority of any schools’ costs will be staff and so, of course, savings are being looked for elsewhere. This announcement makes it more likely parents will bear the brunt and, ultimately, that more children’s education will be disrupted.’

Sir Anthony Seldon, head of Epsom College, said: ‘Labour should be finding imaginative ways to work with the independent school sector, and should not be trying to punish it, e.g. by preventing it from claiming VAT back on receipts. Independent schools include some of the greatest in the world. They have so much to offer the country’s school ecosystem.’

Labour has already U-turned on plans to abolish the charitable status of private schools but insists it would still add VAT to fees.

The move could force bursars to hit families with unaffordable charges from as early as next September, pushing 90,000 priced-out youngsters into the state sector.

Labour, citing a study by the Institute for Fiscal Studies, believes changes to the tax rules could raise as much as £1.5 billion per year.

Labour’s move to charge VAT as soon as next September could force as many as 90,000 youngsters into state education

Julie Robinson, chief executive of the Independent Schools Council, which represents 1,400 independent schools, said: ‘Labour is yet to release solid detail on how they plan to implement their tax on children’s education.

‘A full impact assessment of their plans is needed to understand all the implications for families and schools across state and independent education.’

Earlier this month, Left-leaning education unions made an unusual intervention to criticise Labour’s planned tax raid, warning it could put teachers out of work.

And heads believe the plan would cost the taxpayer £400 million a year, in part due to the extra cost of having to educate displaced pupils in the state sector.

Labour also wants to scrap independent schools’ 80 per cent relief on business rates. The party has pledged to use the money to recruit 6,500 teachers for state schools and to fund mental health support in every school.

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