30/04/25
Starting January 1st 2025, there was a 20% VAT cost added to private school fees. How much will this limit your options if you want to put your children into private education?
Every parent wants to give their child the best start in life and a part of that is making sure they get the best education. In many ways, it’s unfortunate that only those who can pay will gain access to this for their child, but the benefits of a private education are undeniable.
It’s understandable that if you are able to invest in your child’s future in this way, you’d want to do so, but with the new VAT on fees being added, many will be unable to realise this dream for their child.
In this article we’ll look at why this increase has happened in the first place and also what you can do to meet the new increased rates, including strategies to help save money and the ways CTT helps you do this.
Why has VAT been added to private school fees?
The VAT exemption for education and boarding services has been removed by the government as a way to raise revenue for public services. More specifically the public services to do with public education and giving the overwhelming percentage of school-aged children who go to state schools a better chance for a quality education.
So, in a way it is an attempt to address a perceived imbalance in the way public and private schools are paid for. Unfortunately, this will also mean that the cost of going to private school will increase too much for some families to cope.
This could mean the disruption of plans for many who choose to relocate to get their children into good schools or even in the worst-case scenario, it could mean a child that has been going to private school will be unable to continue because of the increase in fees.
Will you be able to keep your children in private education?
Moving a child from one school to another is never ideal. They will have formed bonds at their school, have a social circle, and will be known to the faculty; for both emotional and practical reasons, if you can avoid moving a child from their school, you should do so.
The problem is that it is likely many who have children in private school won’t have budgeted for the additional 20% VAT added to fees. The change in fees could not have been planned to come at a worse time, mid-way through a school year, but what’s done is done – the next step is planning how you are going to deal with it.
Working with CTT Private Client, we can look at your options in greater detail and offer bespoke solutions to you.
How much does a private education cost?
Even before the VAT increase in 2025, private school fees have been steadily rising over the years with boarding fees going up by 9% in 2023/24 alone.
Average costs for day pupils are £7,975 per term; for boarders this cost is £14,153. We should note these figures are averaged across sixth form, senior and junior students.
We see big variations across different regions as well with some day schools only charging £2,000 per term. It is these variations that cause many families to choose relocation to get their children into a private school that is affordable. However, with the 20% VAT and almost all business tax relief for schools with charitable status being rescinded, many schools have no choice but to reflect this in their fees.
It is also not a given that every school will add the full 20% to their fees, as in some cases this will raise tuition to an unattainable amount.
Another thing to consider are the “hidden” costs of private school. Many of these are costs for any child going to any school: things like uniforms, school trips, PE kit, travel. All of these add up and cost more than you probably think!
Many recommend budgeting for an extra 10% over and above the fees each school year. Obviously, this is an ideal but the point we are illuminating is that to be able to obtain the education your child deserves, strict budgeting and control of finances is a must.
With the new price hike it may be time for difficult conversations about whether the benefits of sending your child to private school outweigh the cost.
Is private education worth it?
It can be hard to parse this subject without a degree of nuance. This is mainly because of the harsh truths this sort of question can bring up, especially those around wealth and class in Britain today.
Looking at just the data, when we consider the future career success of children who go to private schools, one study shows that if a secondary school aged child goes through private education, they are 12% more likely to work in a professional or managerial occupation by the age of 25 when compared to children with a similar social background receiving the equivalent education from a comprehensive school.
A paper from the Institute of fiscal studies showed that primary aged children have a 5-point percentile higher reading score than those educated in state school. And for sixth form aged children, they have an 11% better A-level ranking in subjects favoured by universities.
All the numbers point to a substantial advantage for your child if you are able to send them to private school. They are more likely to obtain a higher-status occupation and enjoy the social benefits of their education more than a state educated counterpart.
How can I afford private school?
It could be easy to be discouraged because of the new increase in fees. An important thing to consider is that although the 20% figure sounds like a lot, in many cases private schools will not be adding the full 20% to their fees and tuition varies greatly from region to region, from school to school.
In terms of practical advice, the key is to plan ahead as much as possible. Many prospective parents decide their child will go to private school before the child is even born! This means they have plenty of time to save, especially if they decide to wait to send their child to private school until secondary school age.
Consider the region the school is in. As we have discussed, there are quite large regional variations in cost so it could be viable to relocate in order to enable your child to still attend private school without it breaking the bank.
If your income covers the fees, it is still a good idea to get the advice of a financial adviser. This is because they can talk with you about protecting your income and managing finances so that any future increases or loss of income don’t blindside you.
With all of this in consideration, it can be easy to get blinded by high test scores and exemplary sporting achievements of a school and not consider what the child wants. Although we can say it is demonstrably advantageous to send your child to private school, this doesn’t mean it is the right fit for every child.
Getting advice from CTT
Planning your child’s educational future is of enormous importance, and with this new VAT increase many families are understandably worried whether they will be able to afford to send their child to a private school; something they may have been planning on doing for years.
If you feel you could benefit from a discussion about tax efficient strategies to save and manage your money to enable your child to still experience the education they deserve, don’t hesitate to get in contact with us.
At CTT Private Client we specialise in delivering on our client’s high expectations, taking it as a point of pride to tell you what you need to know, not just what we think you want to hear. This way, we cultivate long-lasting relationships with our clients, built on trust and integrity.
