Guide · Personal Finance
Private School Fees: Planning for VAT and Rising Costs
Fee inflation compounds quietly over a school career, and VAT has made the bill bigger still. Here's how to project the real cost and plan ahead for it.
Why a Single Year's Fee Understates the Cost
It's tempting to multiply today's annual fee by the number of years left and call it done. But fees almost always rise faster than general prices, and that increase compounds — a fee rising 5% a year is roughly 63% higher in 10 years' time, not 50%.
On top of that, UK private school fees now carry 20% VAT, a cost that didn't exist before January 2025 and that applies to the inflated fee, not today's fee.
A Worked Example
Take a fee of £18,000 a year today, with 10 years of schooling remaining, 5% annual fee inflation, and 20% VAT. By the final year, the annual fee (with VAT) has grown substantially — and the total bill across all 10 years is far higher than simply multiplying today's fee by 10.
| Metric | Value |
|---|---|
| Fee today (excl. VAT) | £18,000 |
| Final-year fee (incl. VAT) | £35,184 |
| Total cost over 10 years | £285,267 |
Closing the Gap
Compare the projected total cost to what your existing savings are likely to grow to over the same period. The difference — the shortfall — can then be converted into a monthly saving target, using your expected investment return, so you know exactly how much to set aside each month rather than guessing.
Frequently asked questions
Why do private school fees include VAT now?
From 1 January 2025, the UK government removed the VAT exemption for private school fees, meaning most schools now charge 20% VAT on top. Many schools have absorbed some of this themselves, but most have passed at least part of it on to parents.
How much do fees typically rise each year?
Independent school fees have historically risen faster than general inflation — often 4–6% a year — driven by staff salaries, pensions, and facilities investment. Check your specific school's recent fee history rather than relying on a generic average.
Is it better to save in cash or invest for school fees?
With many years until fees are due, investing can help savings keep pace with fee inflation. As fees become due within a year or two, many parents shift that portion into cash to avoid the risk of needing to sell investments during a downturn.
Should I plan per child or for the whole family?
Both matter: total household cost determines affordability, but per-child annual cost helps you compare options (day school vs boarding, or switching schools) on a like-for-like basis.