Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether her Department has made an assessment of the potential impact of increases in employers’ National Insurance contributions on (a) cost pressures for independent schools and (b) the number of children leaving the independent school sector; and whether the figures included in HM Revenue & Customs policy paper entitled, Applying VAT to private school fees, published on 30 October 2024, took account of proposed increases in employers’ National Insurance contributions.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government publishes Tax Information and Impact Notes (TIINs) for tax policy changes when the policy is final or near final. TIINs give a clear explanation of the policy objective together with comprehensive assessment of the impacts on individuals and families, businesses and the wider economy, equalities impacts, and any other specific area of impact. TIINs look at the impacts of changes to the tax system separately for each measure.
A TIIN assessing the impacts of applying VAT to private school fees has been published online and can be found here: Private school fees — VAT measure - GOV.UK (www.gov.uk).
Details of the changes to business rates charitable rate relief and changes to employer National Insurance contributions (NICs) were outlined at Budget. Notes on the general impacts of these measures will be published in due course alongside the respective legislation when it is introduced to Parliament.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make a comparative estimate of the average cost of (a) VAT, (b) employers' National Insurance contributions, (c) contributions to the Teachers' Pensions Scheme and (d) business rates for independent schools that are (i) liable for business rates for the first time and (ii) already liable for business rates (A) before and (B) after the Autumn Budget 2024.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government publishes Tax Information and Impact Notes (TIINs) for tax policy changes when the policy is final or near final. TIINs give a clear explanation of the policy objective together with comprehensive assessment of the impacts on individuals and families, businesses and the wider economy, equalities impacts, and any other specific area of impact. TIINs look at the impacts of changes to the tax system separately for each measure.
A TIIN assessing the impacts of applying VAT to private school fees has been published online and can be found here: Private school fees — VAT measure - GOV.UK (www.gov.uk).
Details of the changes to business rates charitable rate relief and changes to employer National Insurance contributions (NICs) were outlined at Budget. Notes on the general impacts of these measures will be published in due course alongside the respective legislation when it is introduced to Parliament.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to paragraph 4.10 of the Autumn Budget 2024, published on 30 October 2024, HC 295, what the fiscal effect is of revised launch date of the Lifelong Learning Entitlement.
Answered by Darren Jones - Chief Secretary to the Treasury
The Government is committed to delivering the Lifelong Learning Entitlement, which will transform the post-18 student finance system to create a single funding system, to a revised launch date of September 2026 for courses starting in January 2027. The launch has been postponed by a year to ensure that policy and design fully align with this government’s ambitious vision for the future of our skills landscape, as well as to give providers the necessary time to prepare.
The student finance impacts of the revised launch date were scored by the OBR at the Autumn Budget. The Public Sector Net Borrowing impacts of the delay can be found in the policy costings document on page 81:
Policy_Costing_Document_-_Autumn_Budget_2024.pdf
The delay will have a negligible fiscal impact in 2025-26 and 2026-27 and will generate savings of around £10m a year, measured by Public Sector Net Borrowing, for the rest of the scorecard period. This includes the impact of the previous government’s decision to postpone the launch from February to September 2025.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 28 October 2024 to Question 10422 on Private Education: VAT, if she make an estimate of the cost to the public purse of VAT reclaimed by independent schools for capital spending for items under ten years old.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government published its response to the VAT on private school fees technical note at the Autumn Budget.
This can be found online here: Government_Response_to_the_Technical_Note_on_Applying_VAT_to_Private_School_Fees_and_Removing_the_Business_Rates_Charitable_Rate_Relief.pdf
Annexed to the consultation response is a detailed explanation of the costing methodology used, including the estimation of pupil movements. Where movement occurs, the government expects many of these moves to take place over a number of years at natural transition points, such as when a child moves from primary to secondary school, or at the beginning of their GCSE or A-Level years. Furthermore, some of this movement will result from parents opting not to send their child to private school when they otherwise might have done, rather than removing their child from a private school.
In the same document the government has set out its estimate of the effect of the Capital Goods Scheme on input tax recovery. This adjusts input tax recovery on certain (mainly property) assets acquired over the previous 10 years over the remainder of the 10-year period since their acquisition, aligning it with the business’s current input tax recovery status. This adds £60 million to input tax recovery in the first year, reducing to around £30 million by 2029/30.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's policy paper entitled Applying VAT to private school fees, published on 30 October 2024, if she will publish detail of the analysis that produced an estimate of 37,000 fewer pupils in independent schools and 35,000 more pupils in the state sector.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The government published its response to the VAT on private school fees technical note at the Autumn Budget.
This can be found online here: Government_Response_to_the_Technical_Note_on_Applying_VAT_to_Private_School_Fees_and_Removing_the_Business_Rates_Charitable_Rate_Relief.pdf
Annexed to the consultation response is a detailed explanation of the costing methodology used, including the estimation of pupil movements. Where movement occurs, the government expects many of these moves to take place over a number of years at natural transition points, such as when a child moves from primary to secondary school, or at the beginning of their GCSE or A-Level years. Furthermore, some of this movement will result from parents opting not to send their child to private school when they otherwise might have done, rather than removing their child from a private school.
In the same document the government has set out its estimate of the effect of the Capital Goods Scheme on input tax recovery. This adjusts input tax recovery on certain (mainly property) assets acquired over the previous 10 years over the remainder of the 10-year period since their acquisition, aligning it with the business’s current input tax recovery status. This adds £60 million to input tax recovery in the first year, reducing to around £30 million by 2029/30.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's guidance entitled Charging and reclaiming VAT on goods and services related to private school fees, last updated on 22 October 2024, what estimate she has made of the potential cost to the public purse of independent schools reclaiming the VAT on capital items that are less than 10 years old in each of the next five years.
Answered by James Murray - Exchequer Secretary (HM Treasury)
Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, the Government will confirm its approach to these reforms at the Budget on 30 October and set out its assessment of relevant expected impacts in a Tax Information and Impact Note (TIIN).
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 9 September 2024 to Question 4047 on Private Education: Fees and Charges, whether the Tax Information and Impact Note will include the estimated cost to the public purse of independent schools reclaiming the VAT on capital items that are less than ten years old.
Answered by James Murray - Exchequer Secretary (HM Treasury)
Following scrutiny of the Government’s costing by the independent Office for Budget Responsibility, the Government will confirm its approach to these reforms at the Budget on 30 October and set out its assessment of relevant expected impacts in a Tax Information and Impact Note (TIIN).
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether summer schools which are operated by (a) an independent school on its own site and (b) a third party on an independent school site will be liable for VAT; and whether the liability is changed if a significant part of the course content is English language tuition.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The draft legislation set out the definition of private schools within the scope of this policy. This includes Welsh language schools if they provide full-time education for children of compulsory school age and/or full-time education for a fee to 16-19 year olds and are principally concerned with providing education suitable for that age range (for instance, a sixth form) for a charge.
All education, vocational training, and boarding provided by a private school for a charge will be within scope of this policy, including educational summer schools run by a private school. However, if the summer school purely consists of childcare and is not educational in nature, it will remain exempt from VAT, as welfare services are exempt from VAT. For VAT purposes, education means a course, lesson, instruction, or study in any subject (whether or not that subject is normally taught in schools, colleges, or universities), regardless of where and when it takes place. As well as academic subjects, this includes activities such as performing arts, physical training, sports, and arts & crafts
Summer schools run by third-party providers on a private school's premises are not impacted by these changes. Summer schools run by third-parties have always been subject to VAT if the provider was registered and the summer school didn't qualify for the welfare VAT exemption.
Based on the draft legislation, the degree to which a summer school consists of English language tuition does not affect its VAT treatment.
The final policy design will be confirmed at the Budget on 30 October.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 2 August 2024 to Question 1651 on Private Education: VAT, whether independent Welsh language schools will be exempt from VAT.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The draft legislation set out the definition of private schools within the scope of this policy. This includes Welsh language schools if they provide full-time education for children of compulsory school age and/or full-time education for a fee to 16-19 year olds and are principally concerned with providing education suitable for that age range (for instance, a sixth form) for a charge.
All education, vocational training, and boarding provided by a private school for a charge will be within scope of this policy, including educational summer schools run by a private school. However, if the summer school purely consists of childcare and is not educational in nature, it will remain exempt from VAT, as welfare services are exempt from VAT. For VAT purposes, education means a course, lesson, instruction, or study in any subject (whether or not that subject is normally taught in schools, colleges, or universities), regardless of where and when it takes place. As well as academic subjects, this includes activities such as performing arts, physical training, sports, and arts & crafts
Summer schools run by third-party providers on a private school's premises are not impacted by these changes. Summer schools run by third-parties have always been subject to VAT if the provider was registered and the summer school didn't qualify for the welfare VAT exemption.
Based on the draft legislation, the degree to which a summer school consists of English language tuition does not affect its VAT treatment.
The final policy design will be confirmed at the Budget on 30 October.
Asked by: Damian Hinds (Conservative - East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much revenue to the Exchequer was raised from (a) VAT, (b) business rates, (c) employer contributions to the teachers' pension scheme and (d) any other source paid by the independent school sector in the 2023-24 financial year; and what estimate her Department has made of the revenue that will be raised in the (i) 2025-26 and (ii) 2026-27 financial year.
Answered by James Murray - Exchequer Secretary (HM Treasury)
On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.
Any fees paid from 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. Private schools that are not currently registered for VAT will be able to register after 30 October. Further guidance can be found on the GOV.UK website here: Charging and reclaiming VAT on goods and services related to private school fees - GOV.UK (www.gov.uk)
The Government’s forecast of the revenue raised from these changes will be scrutinized by the independent Office for Budget Responsibility before being published at Budget on 30 October. Details of the Government’s assessment of the expected impacts of these policy changes will also be published at Budget in the usual way.
The Government has considered the policy’s interaction with Human Rights law, and is confident that it is compatible with the UK’s obligations under the Human Rights Act.