Revealed: How private school fees have increased by £1,000s

In the 2024 Autumn Budget, the Labour Party announced that VAT would be added to private school fees, causing many parents to worry about how they will be able to keep up with the rise in costs.

The policy came into effect in January 2025, and now data from the Independent Schools Council (ISC) has revealed its impact on fees, pupil numbers, and bursary support.

Average school fees have increased by around £4,000 a year, marking a steep increase from last year. Yet, with careful financial planning, you can still give your child the education you want for them.

Read on to find out the latest figures on the cost of private education, and how financial planning can make it more manageable for your family.

The average school fees have increased by over 20% since last year

Although VAT is 20%, average fees have increased by more than this since the exemption was revoked, despite many schools implementing measures to help soften the blow.

Day school fees now average £7,382 a term (around £22,000 a year), up from £6,021 a year earlier. This amounts to an annual increase of nearly £4,000, representing a 22.6% rise on the year before.

Some schools have pushed fees up by far more than the average, particularly the most prestigious institutions. For instance, the Guardian reports that Eton’s fees have risen by almost £11,000.

For comparison, annual fee increases were 8.4% in 2024 and 6.4% in 2023. This highlights just how steep the rise is and why many parents are struggling to manage the costs.

Indeed, some schools are feeling the impact as well, and Business Matters reports that over 50 have closed since January.

So, with the significant rise in school fees affecting both parents and schools, it’s never been more important to develop a financial plan that helps ensure your long-term goals remain on track and your child’s education is fully funded.

Pupil numbers have fallen, while bursaries have increased

Before VAT was added to school fees, the government had predicted that around 3,000 pupils would leave the independent system, but the initial drop has been far greater.

According to the BBC, January 2025 saw around 11,000 fewer pupils enrolled in private schools across England compared with a year earlier, marking a fall of 1.9%.

This is a setback to the public sector as well, as it means there are fewer parents than expected paying the VAT and more children in the state school system.

One glimmer of hope for parents is that the number of bursaries has risen sharply, despite predictions that they would be scaled back.

The ISC reports that more than a third of pupils (34.5%) now receive some form of fee assistance, amounting to over £1.5 billion in total support – an increase of 11.4% on last year.

The report found that external sources still provide a larger share of funding than the schools themselves. So, it’s a good idea to consider all potential avenues of support, not just what the school offers.

A financial planner can help you manage the cost of your child’s education

With fees climbing and pupil numbers starting to fall, many families are rethinking whether private education still fits their budget – and this is where financial planning can make a real difference.

With sensible planning and by making some sacrifices, paying for your child’s education may be more achievable than you think. But it’s important to start as early as you can.

A financial planner can help you assess the full range of options to help fund your child’s education, including:

• Applying for bursaries and scholarships from the school and other sources

• Identifying additional financial resources within your family, such as from grandparents

• Releasing capital from your existing assets

• Making certain lifestyle changes, such as reducing holiday expenditure or holding back on home renovations

• Creating an early savings and investment plan to prepare for future school costs, and using financial tools such as trusts to ensure the fund builds efficiently.

A financial planner will take a holistic view of your family finances and can help ensure your long-term goals stay on track while developing a plan to cover your child’s education.

You can read more about how a financial planner can help create a strategy for funding your child’s education costs in our previous article on the topic.

Get in touch

Although you may need to make some adjustments, with the right financial plan, your child can get the education you’ve always wanted them to have.

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.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.