How VAT on Private School Fees Triggered a 22.6% Rise in Education Costs

CREATED BY HELEN BEAUMONT Published: 28/05/2025 @ 09:01AM #PrivateSchoolFees #VATonEducation #RisingEducationCosts #EnrollmentDecline #PrivateEducationSector

The addition of VAT on private school fees since January has caused a substantial increase in education costs, with fees rising by an average of 22.6%. This change has already triggered student enrolment declines, raising concerns about the long-term implications for the private education sector ...

VAT on private school fees, A burden for some, Education's cost

The introduction of VAT on private school fees has sent shockwaves through the educational sector across the country. Since January, private school fees have surged by an alarming 22.6%, leaving many families grappling with the financial burden of higher educational costs.

This increase is not merely a statistic, but a reflection of the challenges faced by both parents and educational institutions alike!

According to recent data from the Independent Schools Council (ISC), the number of students enroled in private schools has dropped by 2.45% since the start of the academic year, amounting to more than 13,500 pupils.

When the government initially announced the VAT on private school fees last July, it predicted a relatively modest decline of about 3,000 students. The stark reality underscores the disconnect between government forecasts and the actual impact on families seeking quality education for their children.

I've always felt that tax policy and education
must go hand in hand!

The added VAT has evidently raised costs beyond the expected level, putting pressure on parents who are already managing the financial strains of living in a time of high inflation. The average fee hike aligns closely with the government's inflation figures, which emphasises not just the impact of VAT, but the cumulative effect of rising costs across various sectors.

The ripple effects of this tax extend beyond just numbers; they resonate within the classrooms and communities of private schools. The ISC has observed a disappointing trend as the number of new pupils enroling continues to dwindle. In the current academic year, new enrolments have fallen by 2.7%, reflecting a worrying decline in the market's appeal amid increasing financial barriers.

With an average fee now rising to £7,382 compared to £6,021 just a year prior, many families are questioning the value proposition of private education in light of soaring costs.

The financial challenges are compounded by an obvious ‘triple whammy': the increasing National Insurance contributions, the imposition of VAT on fees, and the withdrawal of charitable business rates relief. Each element intensifies the fiscal strain on families and brings uncertainty to the sector, with parents already opting to withdraw from private schooling as the looming financial pressure mounts.

It really is essential to recognise the gravity of this situation!

The introduction of VAT on private school fees has undoubtedly triggered a significant rise in costs, with immediate and far-reaching effects on pupil numbers and educational access. The future repercussions of this policy remain to be fully realised, but the initial insights signal a profound transformation within private education.

We need a broad discussion about the fiscal policies that govern such a vital sector.

Until next time ...

HELEN BEAUMONT
Join my mailing list! Click here and be one of the first to know when I publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #PrivateSchoolFees #VATonEducation #RisingEducationCosts #EnrollmentDecline #PrivateEducationSector

About Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist. Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance. When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.

More blog posts for you to enjoy ...
		New Regulations to Fine Crypto-Investors £300 for Non-Disclosure With the introduction of the OECD Cryptoasset Reporting Framework, UK crypto-investors will be subject to stricter regulations. Starting from January 2026, they must disclose personal details and cryptocurrency transactions t...
		Understanding Side Hustle Taxation: Essential Tips from HMRC With the rise of side hustles, HMRC highlights the need to understand side hustle taxation. Earnings above £1,000 require registration and a self-assessment tax return. By being proactive, side hustlers can manage their oblig...
		The Dangers of Raising Capital Gains Tax Rates at the Autumn Budget The debate surrounding Capital Gains Tax rates intensifies as the Chancellor approaches the Autumn Budget. While potential increases aim to address fiscal challenges, history suggests that drastic rate hikes may hinder rather...
		Tax Freedom Day Falls Three Weeks Later in 2025 In 2025, Tax Freedom Day has shifted to the 12th of June, marking a worrying trend for British tax payers. This later date is attributed to rising taxes and frozen thresholds, urging individuals to explore strategies to bring...
		Unlock Extra Income with the Rent A Room Scheme By participating in the Rent A Room Scheme, you can effortlessly earn up to £7,500 a year tax-free. This applies whether you own your home or are simply renting. In today's economy, this scheme provides a vital opportunity fo...
		Salary or Dividends: Optimising Income for Directors Directors of limited companies must make informed decisions about their remuneration strategies. Optimising income for directors involves balancing salaries and dividends while considering significant changes to tax legislati...
		HMRC Taking A Good Look At Savvy Online Sellers HMRC's new data sharing initiative, which aligns with the OECD's global objective to tackle tax evasion, has been met with mixed reactions from online sellers ......
		Trusts Did Not Benefit Family in £442k Inheritance Tax Case The recent case of Afsha Chugtai vs HMRC has significant implications for Inheritance Tax (IHT) legislation, particularly regarding trusts. The tribunal examined whether funds in two trusts qualified for exemption from IHT, u...

Other bloggers you may like ...
		Should You Have A Wide And Diverse Network? Posted by Jacky Sherman on https://www.jackysherman.com People who meet me in Northampton and Milton Keynes often say that I seem to know everyone who goes out networking for their business. It's not true, ...
		Scale Smart: How Virtual Assistants Enable Scalable Business Staffing Posted by Sarah Hannaford on https://blog.sarahpasolutions.co.uk Mastering scalable business staffing is now easier than ever with virtual assistants. As your workload fluctuates, they offer flexible support that al ...
		Business Coaches: Blogging is Your Ultimate Marketing Secret Posted by Steffi Lewis on https://www.sblogit.com Unlock your potential with blogging for business coaches, an invaluable tool for sharing expertise while connecting with your audience. Embrace the un ...
		Scaling Without Silos: Why Accountability Must Cross Department Lines Posted by Steph Birch on https://blog.birchstrategicservices.com To achieve scalability, any business must ensure that accountability goes beyond department lines. Siloed thinking can hinder communication and collab ...