Over the past year, private schools in the UK have grappled with mounting financial pressures including the imposition of a 20% VAT on private school fees in the UK.
Join us as we explore which schools have closed, how it's impacting communities and how nearby private schools can responsibly navigate this turbulent period.
WHAT THIS ARTICLE COVERS:
What is the NEw VATOn Private School Fees?
In 2024 the Labour government in the UK announced it would remove the 20% VAT exemption on private school fees. The policy sent shockwaves through the independent education sector.
Since its implementation on January 1, 2025, this policy has been linked to a series of school closures, disrupting communities, and displacing students.
The government have estimated that this will raise £460 million in 2024/25, rising to £1.51 billion in 2025/26. Labour have claimed that this additional funding will be used towards state education.
Why are Private
Schools Closing?
Over the past year, private schools in the UK have grappled with mounting financial pressures. The pandemic left many institutions struggling with reduced enrollment and increased operational costs. Rising employer National Insurance contributions, reduced relief on business rates, and inflationary pressures compounded these issues.
Roisin Maguire (Former Head at St Joseph’s Prep) described the correlation between VAT and private school closures the "final nail in the coffin" for schools already teetering on the edge of financial viability.
Smaller independent schools, particularly those catering to local communities or offering specialized services, have been hit hardest. These institutions often lack the financial reserves or economies of scale enjoyed by larger schools. As a result, closures have accelerated since the VAT policy came into effect.
The majority of independent schools – like any business – operate to strict margins. An effective reduction in income of at least 15 per cent is serious – particularly now that it has been brought forward to January.
Mr Simon Head, Headmaster at Chafyn Grove School
On an average year, evidence suggests that around 50 private schools close every year in the UK, under normal circumstances. And there are many other factors at play including the rising costs and inflation, reduced birth rates and more besides.
The government have aknowledged that imposing VAT on fees will result in an estimated 37,000 pupils leaving the private sector, representing about 6% of the current private school population, but many critics warn this is a modest estimation.
VAT on Private School Fees:
An International Perspective
When implementing the new VAT policy - the Labour government argued that it would generate revenue to improve state education. Estimates suggest this policy could raise £1.5 billion annually by 2026. However, critics argue that it disproportionately affects smaller schools and middle-income families, forcing some parents to withdraw their children from private education.
Internationally, the taxation of private school fees varies. In many European countries, private education is heavily subsidized or exempt from similar taxes due to its role in complementing state education systems. For instance:
- In France and Germany, private schools often receive government funding to offset tuition costs.
- In the United States, private schools are typically exempt from sales taxes but rely heavily on tuition and donations.
The UK's approach is relatively unique in imposing such a significant tax burden directly on parents and schools without offering subsidies or relief measures. Greece remains the only other country to have imposed VAT on private school fees (since 2015), predicting the specific effects of this new legislation is complex.
What Impact will VAT on PrivateSchool Fees Have?
The government has admitted the difficulty in forecasting the exact outcomes. Nonetheless, several potential consequences have been identified:
- Increased Burden on Public Schools
The imposition of VAT on private school fees raises several concerns, primarily the likelihood that many parents will switch their children to public schools. In areas like Surrey, public schools are already facing high demand.
After the VAT announcement, there was a notable increase in public school applications. Between June and September of 2024, over 3,000 applications were received from children previously enrolled in private institutions.
This surge in demand for public school places may undermine the government's anticipated revenue from this policy. The intended financial support for disadvantaged students might not materialize as planned, as the increased revenue could be offset by the necessity to accommodate more students in public schools.
Despite claims from the Labour Party that there is ample capacity in public schools to absorb students from private schools, due to declining birth rates, recent data shows an increase of more than 18,000 students from 2023 to 2024. - Shift from Boarding to Day Schools
With boarding fees significantly higher than day school fees, it is probable that many families will reduce boarding expenses to manage the increased overall educational costs. - Rising Demand for International Schools
Given that annual fees for private schools in the UK range from £17,000 to £40,000, a 20% increase is considerable. Many high-net-worth individuals (HNWIs) who own properties abroad or are expatriates may consider relocating their children's education to international settings. This could lead to a significant rise in demand for British International Schools.
List of Private SchoolClosures 2025
Whilst this list is by no means exhaustive (some schools and trusts are choosing to merge their sites in order to make an operational saving), here are some of the schools we know are closing in 2025 due to the new VAT on private schools.
- Loughborough Amherst School
284 pupils | Co-ed | Day school
Part of Loughborough Schools Foundation in Leicester has confirmed their closure at the end of summer term 2025. - Maidwell Hall School
160 pupils | Co-ed | Boarding and Day school
Part of the Uppingham Group, Maidwell Hall is confirmed to be closing at the end of summer term 2025. -
The Village Prep School
140 pupils | Girls only | Day school
The Village is and all girls school in Camden run by Chatsworth schools. They announced the closure would come at the end of summer term 2025. -
Oxford House School, Colchester
120 pupils | Co-ed | Day schoolCognita schools announced the private school in Colchester will close at the end of Summer term 2025.
A Cognita spokesman said: “It is with great sadness that we have communicated to parents and staff that we are proposing to close Oxford House School in Colchester at the end of the summer term 2025
-
Moorland School, Clitheroe
190 pupils | Co-ed | Boarding and Day school
The senior school made the abrupt announcement about their private school closure with only days' notice. The Nursery and Junior schools will remain open for the foreseeable future. -
Fulneck School, Pudsey
294 pupils | Co-ed | Boarding and Day School
The prestigious 270 year old school will be closing it's doors by 8th July. -
S. Anselm's Preparatory School, Bakewell
134 pupils | Co-ed | Boarding and Day School
Whilst the school has officially announced it's closure, there are ongoing talks to try and form community support and/or donations to secure the school's future.
"The addition of VAT on school fees, having to pay increased National Insurance contributions, and the removal of business rates relief for independent schools - it is now unsustainable to keep the school open"
Mr Houghton, Chairman of Govenors at S. Anselm's prep school
-
Ursuline Preparatory School
93 pupils | Co-ed | Day school
The Catholic day school has proposed it's closure at the end of the academic year. -
The Royal School, Haselmere
190 pupils | Co-Ed | Boarding and Day school
The Royal school, whose history dates back to 1840 and forms part of the United Learning group will close on 31st August 2025. -
Fairfield School, Backwell
129 pupils | Co-ed | Day school
The school's governors announced the school will closing August 2025. -
Bedstone College, Shropshire
152 pupils | Co-ed | Boarding and Day
Bedstone College, has cited financial issues – including VAT on fees – as a contributing factor to the decision to close at the end of summer term 2025. -
Highfield Prep School, Maidenhead
94 pupils | Part girls only, part co-ed | Day school
Part of the Chatsworth Schools group has proposed closure end of summer term 2025. -
Godolphin Prep School, Salisbury
60 pupils | Girls school | Boarding & Day school
The prep school has been facing challenges. Despite the partnership between Godolphin and local Chafyn Grove school, the Godolphin prep school arm, will be closing end of summer term 2025. -
St Hilda's Prep School, Bushey
151 pupils | Girls school | Day school
Run by the Aldenham Foundation, the school announced that it was consulting on possible closure in summer 2025.
How Local Private SchoolsCan Respond to a Closure
The closure of private schools presents opportunities for local independent institutions to absorb displaced students. However, this must be handled with care for affected families and staff. Key considerations include:
- Sensitivity to Disruption: Recognise that closures result in job losses for teachers and staff, as well as significant upheaval for students and their families.
- Transparent Communication: Schools welcoming new students should communicate clearly about admissions processes while avoiding any perception of exploiting closures for gain.
- Support Systems: Offering counseling or transition support for students can ease their adjustment to new environments.
- Community Engagement: Engage with local communities to ensure a smooth integration process while maintaining goodwill.
By adopting a compassionate approach, local schools can fulfilling their mission, grow their unique community and avoid negative PR.
Mitigating RiskFor Your Private School
If you're concerned about the implications of the new legislation and it's impact on your school - strategic planning is key. Instead of making hasty decisions, savvy heads are finding creative solutions to adapt to the new changes and avoid private school closures.
- Encourage Retention Through Subsidies.
Your existing school community is your biggest asset! Consider a subsidy for existing families to help retain pupil numbers, as families adjust to the sudden increase. Many schools have already reviewed budgets to try and support existing families with a subsidy of typically 5 or 10%. Sadly this has often comes at a cost to funding for the likes of scholarships and bursaries often suffering. - Invest in Marketing through adversity
A recent survey showed that 21% of parents are considering moving their child(ren) to a less expensive private school within the next year. Whilst this may be frustrating news for top-tier independent schools, they are often over-subscribed and in a better financial position to withstand the shuffle.
On the other hand, this news presents an enormous opportunity for more affordable private schools who will now more than ever, need to invest in becoming visible online with search engine optimisation and paid digital advertising. - Streamline your tech-stack
Many schools still juggle multiple technologies for functions such as marketing and admissions, which can be both cumbersome and costly.
By adopting innovative solutions like AMAISTM, schools can consolidate several tools into one efficient platform. AMAISTM equips marketing teams with the data necessary for advanced personalization, enhances the efficiency of admissions teams, and helps in consolidating costs.
-
Review Uneccessary Print Expenditure
Most forward-thinking private schools are already moving towards a digital firt approach to marketing and communications. If you haven't already taken the leap, then now might be the perfect time for you to reconsider that expensive print ad, or fancy print finish on your brochure. Yes, there's still a time and a place for print media, but be sure to prioritise marketing channels that maximise your expenditure.
Conclusion
The imposition of VAT on private school fees has had far-reaching consequences for the UK's independent education sector. While some closures were inevitable due to pre-existing financial struggles, VAT has undeniably accelerated this trend. It's now more important than ever to secure a robust inbound funnel of enquiries and applications.
As more schools face uncertain futures, it is essential for policymakers to consider measures that balance fiscal goals with the preservation of educational diversity. For local schools absorbing displaced students, sensitivity and community engagement will be critical in navigating this challenging period responsibly. The closure of private schools is not just an economic issue but one that profoundly impacts lives—students' futures, educators' careers, and families' stability hang in the balance.
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Meet The Author: Gretlin Aumre, Director of Services Gretlin has spent the last 15 years in marketing, both agency-and client-side, and has a rich understanding of digital marketing and content. With significant experience in the education sector, Gretlin joined Amplify in May 2024 as Director of Services. When she’s not collaborating on school campaigns, she’s spending quality time with her kids, immersed in art or lifting weights. |
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