Labour row back on removing charitable status saying it is not necessary to charge VAT
, but said it will still apply 20 per cent VAT to school fees if the party wins the general election,Ending the tax breaks enjoyed by private schools is one of Labour’s flagship policies, and the party has stated for several years that it would do so partly by ripping up their charitable status.
in a House of Commons debate as recently as January this year. She said that Labour MPs “agree” that “charitable status for most private schools is something that should come to an end”.that Labour has now scrapped the policy and that the party will only look to apply VAT to private schools if it enters No 10.In a statement the party said: “Our policy remains. We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counselling in every secondary school. “This doesn’t require removing charitable status, however, driving high and rising standards for every child against the backdrop of a broken economy requires political choices. Labour isn’t afraid to make them.”revealed earlier this week that Labour will roll out the tax on private schools immediately and in full if it wins the general election, rather than “phasing it in” over several years. It has sparked backlash from the private school sector, with the headmaster at Sir Keir Starmer’s alma mater describing the move as a “distraction” as he urged the Labour leader to reconsider.there were questions over the legality of stripping schools of their charitable status that may have spooked Labour into prioritising its VAT plans. “One could take months, the other could take years,” one source said, adding that ending the charitable status of private schools could also be subject to legal challenge.that it would “set a worrying precedent that any charity seen as not reflecting the political ideology of the day could be subject to additional taxes”. Labour has pledged to hit private school fees with 20 per cent VAT if it comes to power and end independent schools’ tax breaks, which the party estimates could raise £1.7bn to spend on lifting educational standards across the state sector. Labour MPs have repeatedly said the party would achieve this by axing the charitable status enjoyed by around half of all private schools, which would require a law change. In an Opposition Day Debate on the fair taxation of schools earlier this year, Ms Phillipson, the shadow Education Secretary said: “[Education minister] Robert Halfon is with us today. “When he was chair of the Education Committee, he said that ‘charitable status for most private schools is something that should come to an end. The monies saved by Government from these concessions could be used for more teachers’. We agree, but what has happened since?” In the same debate, Alex Cunningham, the Labour MP for Stockton North, said: “The Tories crashed the economy, so I support those on my front bench in their commitment to create funds by removing charitable status from private schools and from other pots where they can find that money.” In November, a Labour spokesperson said the party was “determined that all children, irrespective of their family income, have the chance to achieve their potential through high quality education”. “That’s why the next Labour government will remove charitable status from private schools to fund our national excellence programme for all schools,” the spokesperson added. Labour leader Sir Keir has also stated on several occasions that the party would strip private schools of their charitable status.in 2021, he said: “Labour wants every parent to be able to send their child to a great state school. But improving them to benefit everyone costs money. That’s why we can’t justify continued charitable status for private schools.” However, the party appears to have quietly changed its position on the matter several times over the past year, before confirming toAhead of a speech by Sir Keir setting out Labour’s vision in Gateshead last summer, the party sent out a preview of the Opposition leader’s planned words to journalists. It said he would tell the audience in the North East: “When I say we are going to pay for kids to catch up at school, I also say it’ll be funded by removing private schools’ charitable status.” But when the speech was actually delivered the following day, Sir Keir said: “When I say we have a plan for investing in education, I also say it’ll be funded by closing the VAT loophole for private schools.” Private schools have argued that their charitable status allows them to fund scholarships and bursaries which help widen access.anonymously, said Labour’s plans to end tax breaks for independent schools would force them to make cost cuts elsewhere to avoid passing on higher fees to parents. They said extra spending on bursaries and state school partnerships “would be the first casualty of any loss of pupils or loss of income” caused by Labour ending their charitable status and imposing aUnder current law, independent schools can be recognised as charities if they demonstrate that they make provision for those of “modest means” to attend – usually through scholarships and bursaries. Charitable status means private schools do not have to pay tax on their annual profits, and grants them other tax breaks including business rates relief. New legislation would have to be passed for independent schools to lose their charitable status. Doing so would require a statutory change to the legal definition of “charity”, according to law firm Birketts, which would likely pose wide implications for the charity sector. However, the party could still impose VAT on private schools without stripping them of their charitable status, and this could be achieved much more quickly. The House of Commons enjoys “financial privilege” which allows MPs to decide public taxes and public spending.: “If Labour takes away the tax relief associated with charitable status for independent schools, the policy would create a two-tier system within the charity sector, setting a worrying precedent that any charity seen as not reflecting the political ideology of the day could be subject to additional taxes. “We would love to work with Labour to build more effective ways to achieve our shared goal of improving education for all young people.”
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