A Tory frontbencher has accused the government of being “blinded by class warfare” over plans to force some parents to pay VAT on nursery fees.
From January, parents sending children to nurseries attached to private schools will be required to pay VAT if classes are not “wholly, or almost wholly” comprised of children under the compulsory school age.
This is the term after a child’s fifth birthday, but children born between 1 April and 31 August could wait up to five months to join primary schools in the following September.
Laura Trott, the shadow education secretary, has accused Labour of “being blinded by class warfare” after a government source clarified that 90% of children in these classes would need to be under five to avoid paying VAT.
She said: “With a number of nurseries now set to face a higher tax bill, it is inevitable that parents will end up paying the price through higher fees.”
However, the government has stressed that the “vast majority of nursery classes will not be subject to VAT, as children have usually entered the first year of primary school by the time they are of compulsory school age”.
A Treasury source also clarified that “standalone nurseries not attached to a private school will remain exempt from VAT, regardless of the age of their pupils”.
But the scale of the problem is unclear, as it is ultimately up to parents whether they send summer-born children to primary school the year before they turn five, or the academic year afterwards.
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Shadow education secretary Laura Trott Pic: PA
Purnima Tanuku, the chief executive of the National Day Nurseries Association, told Sky News that school entry deferrals are far more likely in Scotland, particularly for children with additional needs.
This is because the Scottish government can provide extra early years funding to those who delay school starts.
Ms Tanuku said: “Although we are talking about a small number of children being affected in nurseries in private schools, this change could have a huge impact on those parents of pre-school children.
“There are lots of reasons why a family may feel that deferring starting school is right for their child, from their age for summer-born children to those with additional needs or prolonged absences.
“We have lobbied for the recognition of how important the ability to defer a school start is for those children who will benefit.
“These decisions need to be made in the best interests of individual children and not be impacted by financial considerations or how it could impact other families in a pre-school setting.”
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A Treasury source said that the “number of children of compulsory school age in a nursery class attached to a private school will be very low”.
However, they clarified that private nursery classes need to have a “relatively high proportion (c.90%) of children below compulsory school age in order to remain exempt from VAT”.
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A spokesperson added: “The vast majority of nursery classes will not be subject to VAT, as children have usually entered the first year of primary school by the time they are of compulsory school age.
“We want to ensure all children have the best chance in life to succeed. Ending tax breaks on private schools will help to raise the revenue needed to fund our education priorities for next year.”