While you may have already accounted for your child’s school fees in your financial plan, the chancellor confirmed in the Autumn Budget that the VAT exemption for independent schools will be rescinded from 1 January 2025, which could significantly increase costs.

This change may require a careful review of your financial plan to ensure you are able to manage the potential additional fees.

The latest figures from the Independent Schools Council (released before the VAT exemption was revoked) reveal average termly independent school fees to be:

• £14,153 for boarding
• £7,975 for day attendance at a boarding school
• £6,021 for day school

While some schools have suggested they will mitigate some of the increase by saving in other areas, others have already confirmed the full 20% VAT will be added to fees.

The BBC reports that the government expects fees to rise by 10% on average. The Times reports that, without the VAT exemption, the estimated cost of sending a child to private day school for their entire schooling life is around £350,000, and around £694,400 for a boarder.

Funding private education often requires a slightly different approach from other areas of financial planning, as the goal is typically more immediate and short-term compared to other objectives. The recent reforms could create unexpected additional costs, potentially requiring you to make swift adjustments to locate extra funds.

So, read on to discover five ways to help you manage private school fees.

Most independent schools offer scholarships and bursaries for students based on their academic performance and background, and many of the top schools in the country have a number of spaces that waive all fees for students.

If you’re unsure about how you will afford the fees at your preferred school, consider researching the scholarships they offer and checking whether your child or grandchild meets the eligibility criteria to apply.

If your child is already at the school or has secured a place and you are worried about paying significantly higher fees after January, it could also be useful to discuss your situation with the school as there may be grants they can access that could offer support.

The expenses of enrolling your child in an independent school for their entire education are significant, as noted earlier. However, there are notable cost differences between boarding schools and day schools.

One option to consider is having your child attend a day school for either their primary or secondary education, then switching to boarding school for the other phase.

Additionally, using the state school system for part of your child’s education can substantially reduce overall costs. For example, the Times report found that the average cost of sending a child to a private day school from years 7 to 11 (ages 11 to 16) is approximately £149,048. This represents a saving of over £200,000 compared to the cost of private education for their entire schooling (approximately £350,000).

You might have a particular stage of your child’s education that you value most for private schooling. So, by choosing state schools for other periods, you could make it more manageable to afford private education during the years that matter most to you.

Finding additional resources within your family can significantly strengthen your financial position and provide extra funds to cover your children’s school fees.

For instance, if you or your partner are currently not working, returning to the workforce could bring in much-needed extra income for your household.

Additionally, financial support from grandparents can be very helpful.

For example, many grandparents choose to establish bare trusts as a tax-efficient way to save for their grandchildren’s school fees. Bare trusts are especially advantageous when set up by grandparents, as they allow for certain tax benefits that may be less efficient if established by parents.

If you’ve explored other avenues but still require additional funds in the short term to cover school fees, releasing capital from your assets could be an option.

This might involve liquidating some of your investments, which could potentially result in a loss depending on their performance or temporarily set back your progress toward other financial goals. It could also involve withdrawing a portion of your tax-free lump sum from your pension, provided you’ve reached the normal minimum pension age of 55 (rising to 57 in 2028), or considering equity release from your property.

It’s important to remember that equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

Before releasing capital from your assets, it’s a good idea to speak to a financial planner. They can help you assess the long-term implications on your finances and ensure the decision aligns with your overall goals.

An Amber River financial planner can work with you to develop a custom plan to help save for your child’s school fees.

Using cashflow modelling, they can evaluate the long-term impact of these costs on your wider financial plan. They’ll also help you choose tax-efficient investment options and set achievable savings targets, ensuring you’re well-prepared to cover tuition and other related expenses.

By considering the timeline for your child’s enrolment and projected schooling costs based on the new fees, a financial planner can help you set out a clear path forward. This approach ensures your child’s education is secure while also helping to protect your progress towards your other objectives.

To speak to a school planning financial specialist, arrange an appointment or find out more, call 0800 915 0000, or alternatively use our contact form here.