• State school parents and parents with under-5s considering private schools are also being deterred by VAT on fees
• But nearly one in 10 private school parents who are taking children out of their school will not move all of them
• Premium Credit’s School Fee Plan provides funding to help parents spread the cost of fees

Around one in seven (14%) private school parents are considering taking their children out of their schools after the Government decision to impose VAT on school fees from January 1st next year, new research* from Premium Credit’s School Fee Plan, a leading provider of finance for school fees, shows.

Its study among current private school parents found just 37% say the decision to add VAT at 20% to fees will have no impact on their ability to pay. Around half believe funding fees will become ‘much more difficult’ or ‘more difficult’ as a result of the Government decision.

The impact is also being felt by state school parents and parents of under-5s who are considering sending children to private schools. Around one in five (20%) of state school parents and half (51%) of parents of under-5s say they are considering sending children to private schools.

However as a result of VAT on school fees 13% of the state school parents considering private schools have given up on any plans to send their children here while more than half (53%) of parents of under-5s considering private schools have revised their plans. Around one in 10 (9%) say they would not send all their children to private schools as a result.

Current private school parents are making similar decisions – around 9% planning to remove children from private schools, say at least one of their children will continue to go while another 20% are unsure.

Around a fifth (19%) say they spend 20% or more of their household income on school fees and the study with current and past private school parents found 30% had worked overtime in order to pay school bills.

More than a quarter (26%) said they have taken cheaper or fewer holidays in order to find the money for fees while 9% have taken on debt and the same number have borrowed money from family.

The total lent through Premium Credit’s School Fee Plan (SFP), which allows you to spread the cost of a child’s school fees, was around a quarter more last year than in 2021. Total lending increased by 10% last year compared to 2022 and the amount of funding provided through SFP in the first three months of this year is 9% higher than the same period for 2023. The average amount of funding through SFP is now around £20,300.

Stewart Ward, Director Education Sector & Head of School Fee Plan, Premium Credit said: “Confirmation of the decision to add VAT to school fees from January 1st will mean financial readjustments for many private school parents.

“It is looking likely that on average private schools will pass on 15% or 16% of the increase to parents.

“Being able to spread the cost of private school fees will help many parents to plan ahead and adjust their finances to the addition of VAT from January 1st.”

For over 25 years, SFP has helped parents finance their children’s independent school fees by enabling them to spread the cost rather than paying a lump sum each term. SFP is the convenient and manageable way for parents to pay for independent school fees and extras such as music tuition and trips. It splits the cost into regular monthly direct debits, like any other household bill. It has a net promoter score of +70 which is regarded as excellent.

The process of applying for a SFP for both parents and schools is seamless. Parents apply to open their account online before the beginning of any term. If the application is approved, SFP will notify the parents and the school. SFP sends the full payment to the school at the start of each term.

For further information on SFP, please visit https://www.myschoolfeeplan.com

(*) Independent research conducted by Viewsbank online among 643 parents with children who currently attend or private schools in the UK between August 19th and 21st 2024