With the VAT exemption on private school fees revoked, here are 6 tips for managing the new costs

The decision of where to send your child to school is an important one as their schooling can lay the foundation for the rest of their life.

This may mean you want to send your child to an independent school. But, with the VAT exemption for fees now rescinded, there is likely to be a substantial increase in costs.

In light of this change, some schools announced plans to partially offset the increase through cost-saving measures, while others confirmed they would apply the full 20% VAT to their fees.

A study on independent schools reported in MoneyWeek found that since the VAT exemption was revoked:

• Half have increased fees by 15% or more

• A fifth have increased fees by the full 20%

• The average fee increase is 14%.

So, with school fees likely to be considerably higher than before, read on to discover six ways to help you manage the costs.

1. Consider using different types of schooling for part of your child’s education

The report in MoneyWeek also noted the discrepancy between the average costs for different types of schooling.

The latest figures, which are from before the VAT exemption was rescinded, show average annual fees to be:

• £18,000 for day school

• £24,000 for day pupils attending boarding schools

• £42,500 for boarders.

So, with such a wide range of costs, one potential approach would be to opt for different types of schooling for part of your child’s education.

For instance, you might choose to enrol them in a day school for their primary or secondary education and transition to a boarding school for the other phase.  

Alternatively, you could use the state school system for part of their education, which would significantly reduce the overall costs.

Determining which phase of your child’s education to invest more heavily in will depend on the stages you believe are most critical to their academic and personal development.

2. Explore different schools

The figures you read above are national averages, and private school fees can vary significantly depending on the institution and location.

For example, School Fees Planning reports that Abrar Academy in Preston charges annual fees of just £1,500 for day students and £3,000 for boarders. Meanwhile, Good to Know notes that a full year of boarding at Brighton College costs £64,920.

There may be plenty more affordable and equally good (though perhaps not so prestigious) schools in your local area.

So, if you’re struggling to find ways to afford the fees, exploring alternative independent schools could be an option.

3. Enquire about the bursaries and scholarships offered by the school

Independent schools often provide scholarships and bursaries to support students, which are usually awarded based on their academic excellence and personal circumstances.

Indeed, a 2021 report in The Good Schools Guide found that about 30% of children in the private school system received financial support of some kind.

So, it might be worth enquiring with the school about any scholarships or bursaries your child may be eligible for.

If your child is already enrolled and isn’t eligible, it might still be worth speaking with the school, as many have access to grants or additional support programs that could help ease the financial strain.

4. Find extra financial resources within your family

Drawing on additional resources within your family can significantly boost your financial position and could be an effective way of helping to pay for your child’s school fees.

For instance, if you or your partner are not currently in work, returning to employment could considerably raise your household income. 

Furthermore, support from grandparents can also be very useful. They may be able to contribute directly to school fees or establish trusts dedicated to funding education.

Such contributions not only provide much-needed support but can also come with other tax-efficient benefits. For example, assets held in trust are often not liable for Inheritance Tax (IHT).

5. Release capital from your assets

If you’ve considered other options but still require additional funds in the short term to cover school fees, releasing capital from your assets – such as investments, pensions, or property – could be an alternative solution.

While this can provide fast liquidity to meet your immediate needs, accessing your assets in this way may have implications for your long-term financial stability and future plans.

So, to help ensure this decision aligns with your wider goals, it’s a good idea to speak to a financial planner.

6. Speak to a financial planner

The earlier you start saving for school fees, the better. Indeed, beginning the process before your child is even born can give you a significant advantage.

However, whether you’ve been saving for years or you’ve left it until late in the day, a financial planner can work with you to design a tailored strategy for paying for your child’s school fees.

They can use cashflow modelling to assess the long-term effect of private school fees on your overall financial stability. They can also help you explore possibilities of how to find immediate funds to guarantee your child the best possible education.

To speak to a financial planner, get in touch.

Email info@mlpwealth.co.uk or call us on 020 8296 1799.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

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