rewrite this title When will VAT be added to fees?

Summarize this content to 1000 words Getty ImagesThe government has announced details of how it will change tax on private school fees. Labour says it is removing the current exemption from value added tax (VAT) to fund 6,500 new teachers in England.When will VAT be added to private school fees?VAT at the standard rate of 20% will be added to private school fees from 1 January 2025.The government has also cracked down on parents trying to avoid the extra tax by paying fees in advance.It said the tax would apply to all payments for the January term made from 29 July 2024 onwards.One union has said the 1 January deadline may mean there is too little time to properly consult on the plans.The Association of School and College Leaders also suggested introducing the change in the middle of the school year could cause “additional disruption”.What are private schools and how many are there?Private schools, sometimes called independent schools, charge fees to most of their students.While some famous schools like Eton and Harrow charge about £50,000 a year, the average across the UK is about £15,000.There are about 2,500 private schools in the UK, educating about 7% of all pupils, including about 570,000 in England. Private schools have more freedom than government-funded state schools, so do not have to follow the national curriculum.Some local authorities pay for children with special educational needs and disabilities to attend private schools.What is VAT and how does it apply to private schools?Value added tax, or VAT, is the tax you have to pay when you buy many goods or services in the UK. The standard rate is 20%.At the moment, private schools do not have to charge VAT on their fees because of a legal exemption for organisations providing education. About half of England’s private schools are also charities, so receive an 80% reduction on business rates (taxes on properties used for commercial purposes).The Labour manifesto pledged to end private schools’ VAT exemption and business rate relief, rather than to remove their charitable status.The Institute for Fiscal Studies (IFS) think tank previously calculated that the policy would raise about £1.6bn per year. It said this would generate an extra £1.3-1.5bn, after taking into account the estimated cost of accommodating children who might switch from private to state education as a result of the changes. That could allow a 2% increase in state school spending in England.The removal of the VAT exemption would be UK-wide, but education is devolved, so each nation’s government would decide how to spend the additional money.Prime Minister Sir Keir Starmer said that children with legally-binding education health care plans (EHCPs) who are in fee-paying schools because of a shortage of provision in the state sector would be exempt from the VAT increase.However, former Conservative education minister Claire Coutinho said Labour had “no plans” for the thousands of children with Send who do not have EHCPs but are currently taught in the private sector.Will private school fees go up?Removing the exemption does not necessarily mean fees will go up by 20%.All private schools are different, and some may decide to put up their fees more than others. The average cost of private school fees has risen by 20% in real terms since 2010, and by 55% since 2003, even without VAT, the IFS says. However, the proportion of children being privately educated over the period has not fallen.The IFS suggests there could be a small initial drop-off in pupil numbers.Over a longer period, though, it estimates private school attendance could fall by between 3% and 7%, or 20,000 to 40,000 pupils. This represents a small share of the total pupil population, which is more than nine million in England alone. However, the impact on private school attendance is unlikely to be spread evenly, with a steeper fall in some schools than others.The Independent Schools Council (ISC), which represents more than 1,400 private schools, believes the policy may see the closure of smaller institutions, which “operate on tight margins”. It also warned that the policy could make private schools “more exclusive”, cutting their number of fee-reducing bursaries.What could the plans mean for state schools?Sir Keir and the new Education Secretary Bridget Phillipson have both denied the policy will increase class sizes in state schools. They point to IFS research which says it would be possible for the state sector to “easily accommodate extra pupils”, because overall student numbers are set to fall by 700,000 between now and 2030. That drop is larger than the total number of children currently attending private schools. However, pupil numbers are not falling by the same amount everywhere, so some state schools could face pressure on class sizes.Teaching unions have already warned of a crisis in teacher recruitment and retention, driven by concerns over pay and workload.The ISC says private schools are currently “filling in gaps in state provision” which is “under an awful lot of pressure”.

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