Paying private school fees through limited company and VAT
Discussion
I know a few presenters in the past that had some of their fees paid directly to a school... How the employer accounted for that I'm not sure, but it certainly was a tax efficient way for the presenter, as long as they didn't lose sleep!
It does seem a bit grabby of Labour as the private sector takes a burden of tens of thousands off the education system, whilst still contributing to it.
It does seem a bit grabby of Labour as the private sector takes a burden of tens of thousands off the education system, whilst still contributing to it.
Eric Mc said:
It's perfectly legal to employ child labour - provided certain rules are followed.
And putting someone on the payroll doesn't necessarily mean they have to do much in the way of actual work.
Incoming company from Barrowman and Mone - The Chimney Sweep Company LLC. And putting someone on the payroll doesn't necessarily mean they have to do much in the way of actual work.
The one idea that seems reasonable is to pay the school fees a year in advance before any tax change is made.
Personally I doubt the school fees will change anywhere near 20% unless it's a very oversubscribed school (who know their customers will pay up) plus school fees have been rising far beyond the inflation rate over the past 25 years and there hasn't been much screaming from parents about that.
sugerbear said:
Incoming company from Barrowman and Mone - The Chimney Sweep Company LLC.
The one idea that seems reasonable is to pay the school fees a year in advance before any tax change is made.
Personally I doubt the school fees will change anywhere near 20% unless it's a very oversubscribed school (who know their customers will pay up) plus school fees have been rising far beyond the inflation rate over the past 25 years and there hasn't been much screaming from parents about that.
If VAT is applied at the point of supply (which is the expectation) then paying fees in advance will not get around the VAT issue, annoyingly.The one idea that seems reasonable is to pay the school fees a year in advance before any tax change is made.
Personally I doubt the school fees will change anywhere near 20% unless it's a very oversubscribed school (who know their customers will pay up) plus school fees have been rising far beyond the inflation rate over the past 25 years and there hasn't been much screaming from parents about that.
One head I spoke to said they think it will be 8% on fees once they'd modelled the VAT change.
Our head said he just doesn't know. What I expect will happen is that the 18% increase I have seen in fees in the last 2 years will just continue more aggressively.
It makes financial planning for fees impossible. I'm just thankful one of my 2 will finish in 2 years.
There is a serious shortage of special needs type staff/teachers/assistants in state schools where we are (York). I expect this is nationwide. So much so that in September there was quite a large intake of new pupils who were SEN at our school (the school hasn't got much SEN resources but sells a good yarn). This move was mainly because of the shortage in the state system. So if/when labour go through with this VAT on fees they will be punishing families who have turned to private because the state cannot provide for their kids. It really is a badly thought out policy in the current environment that I'm not so sure is much of a vote winner, more of a vote loser.
My mate has a young son who has expressed interest in my line of work, I would like him to work for Purple Fox Enterprises when he is older so want him to get a decent education. Can I sponsor / pay his school fees through Purple Fox Enterprises (vat regd)?
You never know, my mate might do the same for my daughter through his company.
Legal?
You never know, my mate might do the same for my daughter through his company.
Legal?
Incase there is any interest.
"Stop Labour from adding 20% VAT to private school fees and forcing kids to change school" is on the cusp of hitting 100k signatures.
https://www.change.org/p/stop-labour-from-adding-2...
Also a facebook group perhaps worth signing up.
" Education Not Taxation: Parents Against School Fee VAT "
"Stop Labour from adding 20% VAT to private school fees and forcing kids to change school" is on the cusp of hitting 100k signatures.
https://www.change.org/p/stop-labour-from-adding-2...
Also a facebook group perhaps worth signing up.
" Education Not Taxation: Parents Against School Fee VAT "
My thoughts:
1. Probably still cheaper to pay through a LTD company and the BIK rate will be less than the tax rate applied to a dividend for personal use by the director
2. One thing I'm not seeing. Private schools operate charitable status. I can make charitable payments from my LTD company and actually receive tax relief. Having checked the national charity register, which satisfies HMRCs requirements, our local private school is listed. Therefore, I can simply arrange to pay for school fees as a charitable donation.
1. Probably still cheaper to pay through a LTD company and the BIK rate will be less than the tax rate applied to a dividend for personal use by the director
2. One thing I'm not seeing. Private schools operate charitable status. I can make charitable payments from my LTD company and actually receive tax relief. Having checked the national charity register, which satisfies HMRCs requirements, our local private school is listed. Therefore, I can simply arrange to pay for school fees as a charitable donation.
Mark-lzjer said:
My thoughts:
2. One thing I'm not seeing. Private schools operate charitable status. I can make charitable payments from my LTD company and actually receive tax relief. Having checked the national charity register, which satisfies HMRCs requirements, our local private school is listed. Therefore, I can simply arrange to pay for school fees as a charitable donation.
The fees you pay won't qualify. School fees cannot be reclassified as 'donations', Schools register as charities to receive additional voluntary donations via the gift aid system.2. One thing I'm not seeing. Private schools operate charitable status. I can make charitable payments from my LTD company and actually receive tax relief. Having checked the national charity register, which satisfies HMRCs requirements, our local private school is listed. Therefore, I can simply arrange to pay for school fees as a charitable donation.
MaxFromage said:
The fees you pay won't qualify. School fees cannot be reclassified as 'donations', Schools register as charities to receive additional voluntary donations via the gift aid system.
Well you say that, but apparently in the last financial year, the local private school has received £9.5m in "donations". Seems high to me....Puzzles said:
Mark-lzjer said:
Well you say that, but apparently in the last financial year, the local private school has received £9.5m in "donations". Seems high to me....
Give HMRC some credit.This tax will be another punishment for kids and the young. It's really horrible. They're conjuring up a narrative of Eton and millionaires who must be punished and the public love that. It is only a part of the independent school story.
The answer is to first make state schools better, not to first make independent schools worse.
I'm not alone in that my child has been failed miserably by the state system to point I could take action against our local authority. Shes also been failed miserably by the NHS and CAMHS. We're a pretty normal, stable family unit and it's been a journey with near zero state support.
It's changed my life and outlook and I'm still surprised how little support there has actually been considering we're in a developed country.
We found a small independent school and she loves it. It's really really not Eton. It's giving our daughter a chance at an education though. We pay our taxes and we pay again for the school.
We're not poor, but we often work 6 days a week for it. I'd never been inside an independent school until we visited this one and went to a pretty run down state school myself.
We will find the extra money even if need to borrow it but there is also a real risk this small school will need to close down. More kids will end up back in the state school.
If the dream becomes reality and with this extra tax take, the state schools all become great, that'll be 10 years from now. That isn't going to happen.
I genuinely believe Labour know what they're doing and the damage it will do in reality, at least short term. Weighing that up against the power of a good "tax the rich" story though must seem like a winner.
The answer is to first make state schools better, not to first make independent schools worse.
I'm not alone in that my child has been failed miserably by the state system to point I could take action against our local authority. Shes also been failed miserably by the NHS and CAMHS. We're a pretty normal, stable family unit and it's been a journey with near zero state support.
It's changed my life and outlook and I'm still surprised how little support there has actually been considering we're in a developed country.
We found a small independent school and she loves it. It's really really not Eton. It's giving our daughter a chance at an education though. We pay our taxes and we pay again for the school.
We're not poor, but we often work 6 days a week for it. I'd never been inside an independent school until we visited this one and went to a pretty run down state school myself.
We will find the extra money even if need to borrow it but there is also a real risk this small school will need to close down. More kids will end up back in the state school.
If the dream becomes reality and with this extra tax take, the state schools all become great, that'll be 10 years from now. That isn't going to happen.
I genuinely believe Labour know what they're doing and the damage it will do in reality, at least short term. Weighing that up against the power of a good "tax the rich" story though must seem like a winner.
hidetheelephants said:
Puzzles said:
Mark-lzjer said:
Well you say that, but apparently in the last financial year, the local private school has received £9.5m in "donations". Seems high to me....
Give HMRC some credit.Being a registered charity does not exempt an operation from having to register for VAT.
I always thought that the issue was whether public schools should be charged taxes on their profits. Public schools escape tax on their PROFITS because of their charitable status.
JuniorD said:
Lots of these private schools are owned by private equity firms, and there's nothing charitable about them whatsoever.
YepMy son used to attend a private school that was part of a group taken over by some investor.
Son has SEND needs. Private school spent the sun total of zero on any send provision. Prep schools are basically factories to churn out kids for senior schools. If your child is going to cost them money, either you pay extra for it or your child goes without.
speaking to a friend the other day... he's been expensing his son's school fees through his ltd company for the last three years...
spoke to another friend and he's employed his 17yr old son and puts his pay towards paying fees..
in both cases, not a squeak from either their accountants nor the revenue!
IMO, VAT will just be another hurdle for them to overcome / dodge!
spoke to another friend and he's employed his 17yr old son and puts his pay towards paying fees..
in both cases, not a squeak from either their accountants nor the revenue!
IMO, VAT will just be another hurdle for them to overcome / dodge!
isleofthorns said:
speaking to a friend the other day... he's been expensing his son's school fees through his ltd company for the last three years...
I am amazed that has been put through by his accountants. Unless theyve structures the payments in such a way as to be a salary for their child. Gassing Station | Business | Top of Page | What's New | My Stuff