So, reflecting on our most recent outrage, that Children in Need are happy to take money from very rich companies and individuals, and (gulp) incur running costs, I was thinking about the ones I remember us covering here in the last couple of years – Royal British Legion, Kids Company, RNLI, RSPCA, in fact most of the ones that have been attacked in what I’ll slightly euphemistically refer to as the populist right wing press. However, and correct me if I’m wrong please, there’s one notable area that I don’t think we’ve “done” yet, perhaps because that section of the press don’t really go there, perhaps because some of them make use of those ‘charities’..

I refer to what are legally known as “fee-charging educational charities” and are better known as “private schools”.

Yep, for those who don’t know (cos it doesn’t seem to be talked about much) pretty much every private school in the land is registered as a charity. That includes the big name £30K+ per annum ones that most of the cabinet attended, and send their kids to. The ones that educate the progeny of the global super rich. They’re getting tax advantages due to their charitable status.

Is everyone okay with this?

It’s a bloody disgrace.

Taking money due to the public purse to maintain the status quo.

Toffs looking after their own isn’t charity.

APF

Yes – consider the alternative. The government (for a change) gets a benefit from this arrangement.

The tax benefit < potential cost of schooling those in private education.

(approx 1/3 of pupils receive financial support too)

pretty much every private school in the land is registered as a charity…is everyone okay with this?

Yes.

It’s a tax-efficient way of running a not-for-profit organisation.

Are you foaming at the ‘Charity’ label, or the fact that rich people can also exploit this loophole?

Or both?

I’ve just made a brew -anyone for a hobnob? 😀 😀 😀

Edlong: debate in this area is interesting on stw because we are a demographic with an above average proportion of members educated by the independent sector and/or sending their children to independent schools.

I’d suggest we disclose this when we discuss it. Me and kids: state schools but this is very much the exception in my wider family.

The schools don’t exist to make a profit, so even if they weren’t charities then as long as they only broke even every year they still wouldn’t pay any tax.

You say it doesn’t seem to get talked about much – I’d disagree with this as I’ve seen it covered quite a bit – particularly due to the fact that OSCR looked at the charitable status of private schools in Scotland a few years ago.

Most schools were found to be meeting the regulator’s charitable test, the 10 that did not took steps to rectify this and were later found to be meeting the test.

@THM – A good point. However, 20% of entrants* are from overseas, so not a requirement that would need to be met from the public purse.

Should the tax benefits be enjoyed by the sons and daughters of foreign oligarchs?

*Independent School Council, 2015

I was one of the recipients of the charity bit – went to one of the >£10k/term (todays prices) schools for nowt 😉

But I do agree with you, I went as my local comprehensive was utterly crap at the time. My brother was getting bullied there so he went on a scholarship and my parents let me have a go a couple of years later to see if I could get in on one too. They didn’t think I could… but I surprised them.

Whether there is really a place for private schools is another question, and whether they should have charitable status. For me it was difficult as all my friends were considerably more wealthy, I was the poor kid! It has furnished me with a slightly different outlook on life, it made me hugely independent, rubbish at talking about feelings and emotions, gave me the idea that I could do anything and probably opened my eyes to different possibilities than a state school would have.

The crux is – would I send my children to a private school?

No.

Being at the poor end of the spectrum at a place like that is no fun, it is damn hard. The charitable status is only granted because they provide kids like me with a free education paid for out of the money generated by the stupidly expensive fees. I would much rather see additional money pumped into the state schools and a much broader range of social backgrounds mixing, than have an elitist subset that think they are somehow entitled to more than everyone else mainly as they never have to mix with the lower strata of society.

Actually quite a few of the famous ones aren’t registered charities, they are recognised charities (very little difference in practice) because they are partially constituted under the Clarendon Act. A pedantic point, but one I enjoyed making immensely.

Charities can’t reclaim VAT. That’ll learn ’em.

If the charitable status of private schools annoys you,the youll be well annoyed to discover that the govts 15 hours free childcare can be used to lower the overall cost of the first years education,saving approx 3k in fees in the first year,depending on the exact month the child was born

Government is currently consulting on potentially placing some requirements on independent schools to support non fee-paying schools in order for them to retain their charitable status:

https://www.gov.uk/government/consultations/schools-that-work-for-everyone

The schools don’t exist to make a profit, so even if they weren’t charities then as long as they only broke even every year they still wouldn’t pay any tax.

They’d have to pay their full business rates, as opposed to the 80% relief they get as charities – that came to just under £165M tax savings* (so reduced tax revenue for the public purse) for 2012.

*UK Government’s Valuation Office Agency

EDIT: Local Authority (state) schools don’t get relief and have to pay 100% of their Business Rates.

NO.

Private Fee paying schools should be abolished. There is no justification for them that meets any sensible scrutiny. They are a major barrier to social mobility, equality, and opportunity.

A charity as defined in law isn’t what you’d expect as a lay person. I worked for a company registered as a charity part of who’s major business is acting as a consultancy to O&G companies, all perfectly legit. But being a charity does come without some downsides, for instance you don’t have limited liability.

I’ve no issues with whoever being a charity provided they meet the criteria.

But being a charity doesn’t come without some downsides, for instance you don’t have limited liability.

You do if you’re also registered as a limited company.

Yes – consider the alternative. The government (for a change) gets a benefit from this arrangement.

The tax benefit < potential cost of schooling those in private education.

(approx 1/3 of pupils receive financial support too)

Is there any issue at all where you dont just talk about money but actually talk about morals

Jesus was pretty clear on what he thought of folk who did this

There are a number of organizations – some think tanks as well – that exploit the charitable status when the reality is they do not do any meaningful charity work
By any measure theses schools are amongst this
Giving breaks to the wealthy is always an odd thing to do giving it to them so they can further entrench their privileged position in society is a terrible bar to social mobility

If they must exist then let them at least operate as what they are fee paying organisations making money for a service they provide to PAYING customers.
Its not a charity

whats the scandal?

Most schools were found to be meeting the regulator’s charitable test, the 10 that did not took steps to rectify this and were later found to be meeting the test.

Yeah, this is where it is at the moment, the big debate is around the “public benefit test” and it’s a subjective area – there isn’t a handy Charity Commission list of things they need to do, it’s left to the discretion of the trustees to ensure they meet the requirements and can be challenged by the regulator.

It sometimes appears that some are clearly just trying to do the minimum to “get away with it” – a few bursaries for the less well-off and a bit of “community engagement” (such as letting the local state schools have access to their swimming pool).

To be fair, from what I’ve seen (and I’m really not expert in this area) there also appear to be some who take it more seriously and genuinely make efforts to provide value to the communities they are located in, but you could argue that that isn’t any different from a commercial business choosing to give some money to Children in Need, it doesn’t make them a charity, at best it makes them a business with a social conscience.

The major piss boiling thing is that, if you’re rich enoughm you can “donate” to your kids school and deduct it from your own personal tax bill. SO basically you get to choose where all your tax goes.

Try calling up HMRC and asking them to stop your PAYE because you’d decided to give £700 a month to the local cat rescue instead.

I’d suggest we disclose this when we discuss it. Me and kids: state schools but this is very much the exception in my wider family.

Fair enough – me: private, fee paying (was, and is, a charity). Kids: State (selective Grammar School).

Try calling up HMRC and asking them to stop your PAYE because you’d decided to give £700 a month to the local cat rescue instead.

well actually you could go onto self assessment and probably claim relief on your donations.

State school educated work in state school, worked for 11 in a public school.

It’s just an extension of moving to get kids into a good state school or the lottery that is placing kids in local schools. I’m not sure that anyone who complains that their child was sent to a school that performs badly can lambast someone who pays for a child’s education by choice.

The school’s make no profit and in my experience the spend per pupil is about the same as state. The facilities are usually kept going by wealthy donors. The difference is the parents have the money to buy an education and in some cases are much more involved in that education process.

@THM – A good point. However, 20% of entrants* are from overseas, so not a requirement that would need to be met from the public purse.

Should the tax benefits be enjoyed by the sons and daughters of foreign oligarchs?

equally good point – but private education is rapidly becoming beyond the reach of may people and many professions. Hence the rising numbers of overseas pupils – a good and bad thing.

the market is going to sort this out anyway as there is a mass shake out coming – a very few private schools may be able to follow the current trends, but the majority will need to redefine themselves. They are much better at doing this than the Dep of Educ.

it will sort itself out in time – but why the angst – its about 7% if the the pop, let government focus in the 93% where they are not doing a great job – actually they should keep at arms length there too

I blame someone, whoever, whatever. Just think though if we did not have this sort of inequality to moan about then those moaners on here would be board and have no life. “me latte was to milky” will not be enough.

Have you noticed that some religious organizations have charitable status also, some of em are connected to schools and colleges and universities. You could start whole new thread to keep the winging levels up for some time. With any luck the Brexit thread will boil over again and we can get back to that (were is Boris when you need him). Oh no I’ve just realised, Boris, Charities, private school, it’s a conspiracy. STW is being used to promote a political agenda, is it going to be a populist thing like the Trump? You could be on the right issue as some schools for posh kids scankin a bit of tax will certainly cause the masses to vote for a leader who had not privileged education.

you’ll have to forgive me I’m under the weather so am bored.

If a child is going to a non-state school, surely that is a significant saving for the public purse? The parents have effectively paid twice for their child’s education. Through both taxes and school fees, but the state ends up not having to pay for teachers, buildings, admin, all sorts

What is the annual cost per child of state education? If giving some of this to the private school results in a net saving to the public purse, I can’t see how it is a bad deal for the taxpayer?

it doesn’t make them a charity, at best it makes them a business with a social conscience.

TRUE

the market is going to sort this out anyway

the market that led to the dark and satanic mills where children died because it was cheaper than stopping production

is this the market you are placing all your faith in to right all wrongs?

why the angst – its about 7% if the the pop

Why do you have to play dumb ?
How many folk need to explain it to you on how many threads before you actually grasp the point?
you are free to disagree with it but dont pretend you are so dim you dont know what it is ; being disingenuous does not become you.

I find it a bit baffling – In that I don’t understand what the motivation for them to be charities is. Its only tax efficient in the sense that its non-profit disturbing so there are not profits to tax. Any surplus after the costs of running the school needs to be re-invested.

I don’t understand the motive for that – if you’re charging rich people a lot of money – why not make some profit from it?

The major piss boiling thing is that, if you’re rich enoughm you can “donate” to your kids school and deduct it from your own personal tax bill. SO basically you get to choose where all your tax goes.

Try calling up HMRC and asking them to stop your PAYE because you’d decided to give £700 a month to the local cat rescue instead.

OK, a couple of points on this – actually you’re wrong on the cat rescue thing, you can do this. Instead of giving them £700, give them £560 and tick the Gift Aid box – they still get £700 and you have effectively got the tax back (£140) on your £700 donation.

On your other point re. the tax deductability of the donation to the school, it’s essentially the same as the above, but a bit more admin for people doing tax returns.

If you want to get incensed by parents / “customers” of private schools getting personal benefit derived from the school’s charitable status, I can do better than that, see my next post…

ninfan – it isnt.

Abolish private schools is a lose:lose situation. Folly and unnecessary. Why close down things that we are good at? Bizarre idea…

Every parent paying fees for a child at a private school is already paying for the education that the child won’t take up at a state school and as they will be higher rate tax payers living in expensive houses they will be paying for the education of the children of an unknown number of Internet Argumentalists on here who will, no doubt, be shouting from the rooftops at how unfair everything.

( when they are not puking at the idea of someone giving a lot of money to a worthy charity )

Private education is very cost-effective for the state and long may it continue.

OP so we should include the Universities too then ?

Most schools don’t make a profit so registering then as a charity makes virtually no difference, any endowment funds would move offshore if they where dragged into a tax net.

As TMH says private schools aside from generating large amounts of tax and national insurance on wages save the state billions in having to educate children.

Why close down things that we are good at? Bizarre idea…

Because it saves the government having to admit that state schools aren’t nearly as good as they should be.

Fee paying schools are brilliant! My son goes to state school but might switch him when he’s older.

I went to decent schools with the assisted places scheme that no longer exists, shame I say. Didn’t matter to me that most of the kids came from wealthy families. Of course these days kids come from all sorts of backgrounds – except the poorer ones who used to be able to get assisted places.

Shall we get started on the Universities as well?

The top charities by income in Scotland last year:
University Of Edinburgh
University Of Glasgow Court
University Of Strathclyde
University Of Dundee
University Of Aberdeen
University Of St Andrews
Heriot-Watt University
The Glasgow Housing Association Limited
Culture & Sport Glasgow
Glasgow Caledonian University
Edinburgh Napier University
University Of Stirling
The Church Of Scotland
Court of the University of the West of Scotland
The Robert Gordon University
Edinburgh College
University of the Highlands and Islands
SRUC
West College Scotland
New College Lanarkshire
Board of Management of North East Scotland College
Fife College
City of Glasgow College
Richmond Fellowship Scotland Ltd
Glasgow Clyde College
Ayrshire College
Edinburgh Merchant Company Education Board
Mercy Corps Europe
Board Of Management Of Dundee And Angus College

I find it a bit baffling – In that I don’t understand what the motivation for them to be charities is. Its only tax efficient in the sense that its non-profit disturbing so there are not profits to tax.

£165M of Business Rates relief?

Right, try this one for size / acceptability:

Parents can invest big stacks of their money via the schools, and take advantage of the school’s charitable status to not pay tax on the interest. Here’s how it works:

You’re a parent of a kid at X school, fees are £30K per annum. You pay the school £150K of the fees in advance. The school then invests that £150K in a fixed interest product. Since it is the school and not the parent that has made the investment, there is no tax to pay on the interest (cos the school’s a charity). The school then gives the parent the value of that (tax free) interest as a discount against their school fees.

This isn’t a new thing, by the way, it’s been going on for decades. Some schools are more aggressively marketing it to parents than they used to though.

Also note that new State Academy’s automatically become Charities

Every parent paying fees for a child at a private school is already paying for the education that the child won’t take up at a state school and as they will be higher rate tax payers living in expensive houses they will be paying for the education of the children of an unknown number of Internet Argumentalists on here who will, no doubt, be shouting from the rooftops at how unfair everything.

Apart from the 20% of them that aren’t from the UK and aren’t paying any UK tax and whose kids’ education wouldn’t be the responsibility of the state.

Abolish private schools is a lose:lose situation. Folly and unnecessary. Why close down things that we are good at? Bizarre idea…

because they are elitist, and have no part to play in any system of comprehensive education for all children? Every education report you care to read on the subject will tell you that one of the major barriers to social mobility is education, and these institution serve NO other purpose than to prevent that from happening.

Very easy to preach about closing private schools. Less easy when it’s your son that has the choice of 40+ pupils in a class, or 12. If you had the money, can you honestly say you wouldn’t go the private route?
Which is why so many labour MP’s use the private sector.

So yes, I’m very happy that they’re charities.

Apart from the 20% of them that aren’t from the UK and aren’t paying any UK tax and whose kids’ education wouldn’t be the responsibility of the state.

OK, 80% then, the other 20% ( I’ll accept your figures at face value ) are simply bringing money into the country.

Which is a good thing too.