We all want to give our kids the best start possible and for a lot of parents and guardians, that means investing in independent education. But with the government recently confirming their intention to impose 20% VAT on independent school fees from 1 January 2025, it’s becoming an increasingly expensive choice.
Sending your children to an independent school is already a costly option. The Independent Schools Council’s 2023 census indicates that parents are paying an average of £16,656 annually for day schools, a 5.8% increase from 2022 and over 40% higher than the average in 2013. And these figures don’t include additional expenses such as uniforms, wrap=around care and school trips.
If applied, the additional 20% VAT charge affect school terms starting after 1 January 2025, including any fees for that period paid in advance from 29 July 2024. Clearly the extra financial burden will be playing on the minds of many parents and guardians. And particularly so in Edinburgh, where 25% of children are educated in the independent sector.
Seeking professional financial advice can be a great source of support to families facing higher fees for their children’s schooling. Cashflow planning in particular is a powerful tool allowing people to map out different scenarios and understand the potential impact of increased school fees on their financial future.
Here's how cashflow planning works:
Mapping scenarios: creating detailed projections of income, expenses and savings over time, considering different financial scenarios. With a clear sense of the longer-term impact of additional school fees you can start to consider possible options.
Impact analysis: visualizing how different strategies, such as using savings, receiving gifts or adjusting other expenditures, could help and what that might mean for your overall financial picture.
Future planning: by understanding the long-term implications, you can then make informed decisions and take necessary steps to mitigate any negative impacts on your financial goals.
We’d always recommend that parents and guardians considering private education for their children seek advice sooner rather than later. Early planning can make it easier to budget for the additional costs over time, integrating them more comfortably into a longer-term financial plan.
By addressing these changes proactively, families can balance out sending their children to the school of their choice whilst managing the financial impact and maintaining their broader financial objectives.
Author
Ross Leckridge is a Chartered Financial Planner at Aberdein Considine Wealth.
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