Parents who pull their children out of private education because of new VAT expenses could cost the UK treasury up to £1.8 billion ($2.4bn), a report has found.
The new Labour government is moving to introduce VAT on private school fees.
The Adam Smith Institute (ASI) looked at what parents might do if they take their children out of private school and how they could spend the money if it does not go on fees, potentially tens of thousands of pounds per pupil.
To help its calculations, the ASI examined what happens when people experience sudden wealth gain, such as an inheritance or lottery win.
Report author Maxwell Marlow said some parents could work fewer hours or retire early, meaning a cut in the money they pay in tax.
It found the “unintended consequence” of the new UK government policy could cost the treasury between £360 million and £1.81 billion.
“There is very little evidence on what will happen if the government imposes a tax on private education because most countries have never tried it,” said Mr Marlow, director of research at the institute.
“It is not possible to exactly predict how many children will leave, how many parents will reduce their working hours and to what extent, and what kind of impact it will have on state schools. That is exactly why it’s so risky.
“What evidence on people who have experienced other types of wealth gains tells us is that it is likely that parents will reconsider how much they want, and need, to work. ”
The government calculates its manifesto pledge to introduce VAT on school fees will raise £1.6 billion, part of which will be used to fund 6,500 teaching posts in state-run schools.
The VAT move is scheduled to begin on January 1 next year.
The government has taken measures to ensure wealthy parents do not evade VAT by paying school fees far in advance before the tax takes effect.
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TOURNAMENT INFO
Opening fixtures:
Friday, Oct 5
8pm: Kabul Zwanan v Paktia Panthers
Saturday, Oct 6
4pm: Nangarhar Leopards v Kandahar Knights
8pm: Kabul Zwanan v Balkh Legends
Tickets
Tickets can be bought online at https://www.q-tickets.com/apl/eventlist and at the ticket office at the stadium.
TV info
The tournament will be broadcast live in the UAE on OSN Sports.
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Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.
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Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
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Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
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Send “thenational” to the following numbers or call the hotline on: 0502955999
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