FT Logo

Copy article

FT Editor Banner

Labour plans for introduce 20% VAT on private school fees

Journalist: Ima Jackson-Obot, FTAdviser

ended 12. June 2024

Hello advisers,

I am doing a story on the Labour Party's plans to introduce 20% VAT to private school fees.

Can you tell me:

Your thoughts on this

What impact is this likely to have on your clients if it happens / What are your clients telling you? / What proportion of your clients are very worried about the impact on their finances?

How are you helping clients?

Do you think the Labour Party should have found another way to plug the gaps in the state school?

Thanks

Ima

3 responses from the Newspage community

Copy all

Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The majority of parents who send their children to private schools will not have a problem arranging their finances to fund VAT on the fees. This is a sensible proposal to increase taxes on those with the broadest shoulders to fund services for those less fortunate. Even the Tories haven’t kicked back on this plan, because they know it’s popular with the public and a progressive policy that makes sense in a country that needs to fill the tax gap from multiple sources.
Copy

Riz Malik
Independent Financial Adviser at R3 Wealth
Labour should keep in mind that it is not only the wealthy who send their children to private schools. Many parents make significant sacrifices in their own lives to be able to afford it. A common sense approach would be to gradually phase in any such increase if they were determined it would solve a problem that many do not think exists. The implication to those with more than one child at school could be an issue putting more stress on state schools with limited resources.
Copy

Richard Squire
Founder & CEO at MyFinanceFuture
People can't be expected to be overjoyed by one of their major spend items going up by 20%, though many will just take it on the chin. We expect our higher earning customers who pay private school fees out of income to cover the VAT by adjusting their financial plans, either by accepting a slightly later retirement (by maybe a year or so) or making lifestyle adjustments either now or later. Those who instead cover school fees partly from savings will have to consider whether they have enough resources to fund the increase over the remaining duration of their children’s time at school. Those nearing the end of the journey should mostly be okay, but those with young kids deciding whether to go down the private school route may have to reconsider. We advise our customers facing this situation to update their financial plans to include the VAT increase, see what the impact would be and what lifestyle or other adjustments would be needed, before coming to a decision.