2 days ago
Total cost of private school to almost double to £380,000
The cost of sending children to private school will almost double after the introduction of VAT on fees, analysis suggests.
The parents of a privately educated child leaving school this year after A-levels are likely to have spent an average of £204,622 on fees, according to Weatherbys Private Bank. The cost of putting a child of the same age through boarding school is estimated to have been £413,471. However, costs vary widely with the Good Schools Guide putting the highest annual fees at £75,000.
Weatherbys says that for a child starting in reception at a private school this September the cost could ultimately reach £377,000 — £763,000 if they were boarding. This assumed annual inflation of 3 per cent, which accounts for two thirds of the increase, with VAT responsible for the rest.
Last September private schools put up fees by an average 6.7 per cent. When 20 per cent VAT was imposed in January, many schools initially cut fees by 5 per cent to cushion parents from the immediate impact, but overall, the average fee rose by about 22 per cent.
Oliver Barnett from Weatherbys said: 'I'm sure sending out invoices with VAT on was a nailbiting moment for some heads, nervous about losing pupils. We expect that schools will attempt to recover some of the discount they gave in January. Historically, schools increase fees above inflation, so our 85 per cent growth estimate is conservative.'
Barnett said there were other pressures on schools. Some years had a 5 per cent drop in pupil numbers, while schools have lost their eligibility for business rates charitable relief and are dealing with higher employer national insurance contributions. Although many schools are expected to manage these pressures, others may struggle to remain financially viable. Barnett said parents should consider the long-term stability of a school to avoid disruption during their child's education.
Fiona Fernie from the accountancy firm Blick Rothenberg said: 'Labour's intention to target wealthier families with VAT on school fees overlooks that many families making sacrifices to afford private education are not necessarily very wealthy.
'Some send their children to private schools because local state schools are inadequate or cannot provide necessary specialist services. These families will be hit hardest, with many likely to be priced out over the coming years.
'While the revenue from VAT on school fees is intended to fund state schools and hire 6,500 new teachers, there is little evidence that this teacher pool exists or that funding will cover additional classrooms needed for increased pupil numbers. More pupils in state schools with fewer resources will create challenges.'
Rathbones Asset Management has estimated that parents will pay up to £111,300 more per child over their school life because of VAT.
Richard Cook from Rathbones said: 'The earlier parents start saving and investing for private school fees the easier it is to spread the cost and manage finances. Investments may help beat inflation and compound returns over time, unlike cash savings. A qualified financial adviser can help families plan cashflow and investments aligned to their risk appetite, ensuring education goals don't compromise broader financial resilience.'
Julie Robinson, the chief executive of the Independent Schools Council (ISC), said: 'Schools will always do all they can to keep fees affordable for parents. A third of pupils at ISC schools receive some sort of fee assistance, and the amount spent on bursaries is at an all-time high. However, the government's decision to tax education will inevitably have an impact on cost, with a cumulative effect over several years.'
