Purnima Tanuku, chief executive of the National Day Nurseries Association, said that the VAT rise next January, from 17.5 per cent to 20 per cent, announced in the Chancellor’s Budget will impact on the ability of nurseries to invest in their settings and put pressure on parental fees.
She added, ‘NDNA will be looking at the business support mentioned in the Budget, and it is essential that nurseries are able to access this. Nurseries play a vital role in supporting families, and in enabling parents to work and make a contribution to economic recovery.’
Neil Leitch, acting chief executive of the Pre-School Learning Alliance, said, ‘The impact of increased VAT for the early years sector is nothing more than an additional 2.5 per cent tax. At the moment, suppliers are exempt, so we would call on the Government to either zero-rate or allow organisations to reclaim their VAT.’
Sian Lewis-Evans, owner of Gingerbread Day Nurseries in Stoke Hammond, Buckinghamshire, who launched a campaign last year calling for nurseries to be able to register as zero-rated, pledged to restart her campaign in light of the VAT increase.
She said, ‘As a small business, sustainability is a vital component. The jump back to 17.5 per cent was manageable, but the increase to 20 per cent will be far harder to recover. Unlike maintained schools and nurseries, private settings are unable to claim back VAT from their local authority. Being zero-rated rather than exempt would mean that we could claim back our VAT and the cost would not have to be passed on to parents, who are already going to be affected by the Budget.’
Business leaders said that small organisations, including some nurseries, should benefit from other measures announced in the Budget, such as the reduction in small companies’ tax.
Phil Orford, chief executive of the Forum of Private Business, a small business support group, said, ‘Obviously, the VAT rise will have an impact on many smaller businesses, either directly or indirectly. However, the one per cent reduction in small companies’ tax is obviously more than welcome – it’s something the small to medium enterprise community has long called for. It also represents a two per cent cut in real terms as the previous Government had planned to increase small companies’ tax by a further percentage point.’
- Sian Lewis-Evans' petition is at http://www.ipetitions.com/petition/zeroratevat/
