by The Government’s plans to impose VAT on private schools from 1 January next year may be delayed due to warnings from trade unions, tax experts and school leaders that there will be administrative chaos and the loss of teachers’ jobs, putting pressure on the state sector if the deadline is exceeded.
Related: Private schools say enrollments are down mainly because of the upcoming VAT on fees
The Treasury on Saturday night refused to confirm that the plan to impose a 20% VAT on private school fees would go ahead from January 1, as the chancellor, Rachel Reeves, had confirmed in July, saying instead that it would introduce ” as soon as possible”.
Many organizations in the education sector, including those who support the principle of cutting the VAT, are calling for a delay until next September to give private schools more time to register for the new tax, the assess impact and adapt.
There are also concerns about the effect on the special educational needs and disability sector (SEOL) if more state schools are required to carry out SOLE assessments for pupils transferring from private schools.
Private school leaders say they are still unable to register for VAT because the plans are not yet enshrined in law and will not be until after the October 30 budget.
Accountants and tax experts say this will leave organizations, often with little tax expertise, little time to adapt. Bills for the term beginning in January are usually sent out in December. Doubts are being raised over the timetable after the Treasury was hit by calls for delays and demands for a proper impact assessment to be carried out in responses to an official consultation, which ended last month.
The NASUWT teaching union said in its response that while it has the government’s ambition to “break down the barriers to opportunity” and recruit an extra 6,500 teachers to the state sector, it is concerned about redundancies for those in the private sector and the risk of . permanent job loss from the profession.
It recommends that an impact assessment should be carried out on the potential increase in Send assessments in the state sector and the level of provision required.
He says: “We ask that a more reasonable time frame be proposed to implement the change fairly and without undue disruption to teachers, students and parents.”
The School and College Heads’ Association says in its submission: “We strongly recommend that the government carry out a comprehensive impact assessment and full consultation on these proposals and publish them before they are formalized into legislation, and that their implementation be delayed until until September 2025. at the earliest.”
Although the government is not considering relaxing the content of the plan, any delay would embarrass the Treasury, which has already made it clear that it is rethinking parts of Labour’s plan to declare non-household tax status. deleted due to concerns about the amendments. bring in less money than expected.
There are concerns that planned changes to tax arrangements for non-thermals, aimed at raising extra money to spend on public services such as the NHS, could encourage wealthy foreigners to leave the UK.
The VAT plan for private schools, like the plan for non-places and their tax arrangements, was one of Labour’s more significant policies, which it said would help pay for new teachers, as well as free breakfast clubs in free in all primary schools.
Asked whether the plans could be delayed, the Treasury released a statement from a government spokesman who did not directly address the issue: “We want to make sure every child has the best chance in life . Ending tax breaks for private schools will help raise the revenue needed to fund our education priorities next year, such as recruiting 6,500 new teachers.
“The government has carefully considered representations on this policy and will publish a response to the consultation at the budget.” Sources said only that the plans would be introduced “as soon as possible”.
In its submission to the Treasury consultation, the Chartered Institute of Taxation, the UK’s leading professional body on aspects of taxation, said: “We are concerned that neither HMRC [HM Revenue and Customs] nor will private schools be ready to effectively implement the change in VAT liability with a start date of 1 January 2025.
“As there is currently no tax information and impact note or guidance published, to effectively shorten the implementation date of 1 January 2025 when schools close in mid-December, we recommend that the implementation date be delayed accordingly.”
The Association of Taxation Technicians said: “The proposed start date of January 1 does not give schools or HMRC enough time to prepare and deliver the proposed changes satisfactorily. Just starting halfway through an academic year could cause additional difficulties for schools and students. Postponing commencement to September 2025 should be considered.”
Julie Robinson, chief executive of the Council of Independent Schools, said: “Even those who favor VAT on the independent sector are saying that January 1 is not possible.”
