One in four reconsider private school over VAT on fees

One in four reconsider private school over VAT on fees

May 1, 2024

The possibility of VAT being added to school fees if Labour wins the next election could force 26% of parents to take their children out of private schools

The cost of living crisis appears to affect people in all categories of wealth, with those who send their children to private schools taking out loans, selling their houses and borrowing from parents to keep their children in private schools, found a survey by wealth management firm Saltus.

The IFS ‘Be the Chancellor’ activity predicts ending the VAT exemption will bring in an extra £1.8bn.

Mike Stimpson, partner at Saltus said: ‘On average, private school fees increased by 6% from 2022 to 2023 and these are likely to rise by a further 5% this September.

‘If Labour wins the next general election and carries out its pledge to impose VAT on school fees, then we could see the cost of private tuition rise by at least a further 20% in the years to come.’

A quarter of respondents to a Saltus Wealth Index Report said they would have to take out loans to continue with educating their children in private schools, and 9% said they would ask their parents for help with the cost of fees.

Over two thirds (71%) of the 2,000 respondents said rising fee costs would affect where their children go to school.

Just under a third said their children will no longer be able to attend a private school, with 21% saying they would have to move their children to a state school. Half of these people said they would try to move to a catchment area where a better school was located.

If VAT charges were added to private school rates, then just 24% claimed they would be able to afford the fees, with half saying they would have to make changes to their life to be able to.

Stimpson said: ‘Price rises over the past few years are already having a significant impact on parents’ ability to pay and further rises will almost certainly price some families out of private education completely.’