Just over three months since the policy’s introduction, the UK’s private education sector is already grappling with the effects of the government’s decision to apply 20% VAT to private school fees. Once a fiercely debated policy, it has now become a financial reality for thousands of families. Whilst elite schools like Eton and Harrow appear largely insulated from the impact, some smaller independent schools are struggling, and families are being forced to rethink their educational choices.
At Lumos Education, we work closely with parents, schools, and educators, and the early signs of this policy shift indicate a complex and rapidly evolving situation.
How private schools are responding
As of January 2025, the UK government has implemented a 20% Value Added Tax (VAT) on private school fees. In response, many private schools have adjusted their tuition to account for this change. According to an analysis by The Telegraph, approximately half of the surveyed private schools in England, Scotland, and Wales have increased their fees by 15% or more, with about 20% of these institutions implementing the full 20% increase. On average, the fee increase across these schools is around 14%.
It’s important to note that the government had anticipated an average fee increase of about 10%, suggesting that the actual adjustments by many schools have exceeded initial expectations.
These fee increases have significant implications for families considering private education, as well as for the broader educational landscape in the UK.
Rising costs and increased financial pressure on families
The immediate effect of VAT on private school fees has been a steep rise in annual tuition costs—adding thousands of pounds per child for many families. For middle-income households, this increase is a significant burden, pushing some to reconsider whether private education remains a viable option.
One stark example is Loughborough Amherst School (formerly Our Lady’s Convent School), which recently announced its closure, citing financial pressures worsened by the new tax. Other schools which have closed, citing VAT as a contributing factor, include, Abercorn School in St. John’s Wood, Maidwell Hall, in Northamptonshire, Alton School, in Hampshire, and St Joseph’s Preparatory School in Stoke-on-Trent among others. Whilst school closures are not unheard of—around 85 independent schools shut annually—the timing suggests that VAT may accelerate financial instability across the sector.
Are families leaving private education?
While it’s too early for concrete numbers, signs of an exodus are emerging:
- Withdrawals are rising: Some private schools report increasing numbers of families pulling their children out due to affordability concerns.
- Shifts to state education: The Independent Schools Council (ISC) had warned that thousands of students could transition to the state sector, and early reports suggest this is happening in areas where state schools are considered strong alternatives.
- Growth in alternative education models: Some families are opting for online private schooling—which was already subject to VAT before the policy change—while others are blending state education with private tutoring to maintain high academic standards at a lower cost.
The state sector feels the strain
For families moving into state education, the transition has been anything but smooth. In areas where private schools historically enrolled a significant portion of students, state schools are reporting:
- Higher application numbers: Increased demand for grammar schools and top-performing comprehensives suggests parents are prioritising quality state alternatives.
- Concerns over funding delays: The government promised that VAT revenue—estimated at £460 million in 2025 and £1.5 billion in 2025-26—would be used to improve state schools, including recruiting 6,500 additional teachers. However, headteachers warn that the funding has yet to materialise in meaningful ways.
- Teacher shortages worsening: According to a recent Observer report, budget constraints are forcing teacher and teaching assistant layoffs despite government pledges to invest in education. Recruitment targets for secondary teachers have fallen short by nearly 40%, deepening the crisis.
Source: The Guardian – Cash-Strapped Schools Lay Off Teachers
A divisive policy with no easy answers
Critics warn that the policy disproportionately impacts middle-income families, forces struggling schools to close, adding pressure to an already stretched state sector. The government needs to be reflective of these issues and ensure the policy is enacted in a way that supports educational outcomes.
Supporters of VAT on private school fees argue that it helps level the playing field, ensuring wealthier families contribute more to state education. Additionally, the Private Education Policy Forum (PEPF) found that as the policy was introduced, 54% of the public supported the introduction of VAT on private school fees, while only 22% opposed it. Yet, as the real consequences unfold, opinions may shift. If the government wants to keep support for this policy, it is vital that the treasury spends the additional revenue in a effective way that truly bolsters the educational landscape across the UK.
What should parents do next?
The VAT policy has reshaped the private education sector—make sure you’re prepared for what comes next.
With private school fees rising and state education under strain, parents face difficult choices. Now, more than ever, it is essential to have expert guidance to navigate these changes.
Lumos Education: helping families to make the right education choices
At Lumos Education, we specialise in helping families:
- Assess the best private school options in light of rising costs.
- Explore alternative education solutions, including hybrid schooling, grammar schools, top state schools, and international and bilingual schools.
- Plan for admissions, bursary and scholarship applications to maximise financial support.
- Make a seamless transition to state schools, ensuring the best placements.
Please contact us for a consultation to discuss the best path for your child’s education in this changing landscape.
