Over half of parents with children in private schools are likely to feel the impact of the upcoming VAT on school fees. Starting in January, private school fees will be subject to VAT. As a result, many High-Net-Worth Individuals (HNWIs) are considering transferring their children from private to state schools.
Who Will Be Impacted, and How?
Recent research highlights the significant impact the VAT on private school fees could have. The study analyzed responses from 2,000 HNWIs and found that 993 parents had children attending private schools.
- 55% of these 993 parents expressed concern about the rising fees affecting their children’s education.
- Only 15% of parents stated their children would remain in private education despite the fee hike.
- 20% of parents plan to transfer their children to more affordable schools within the next academic year.
Are HNWIs Unhappy with VAT on Private School Fees?
According to an expert, the government’s decision to add VAT to private school fees is largely unpopular among wealthy families, particularly because it will take effect in January rather than at the start of the next academic year.
Even before this announcement, rising costs in recent years have already been putting pressure on parents, making it harder to afford private education.
What Is the Impact on the Larger UK Economy?
Despite concerns regarding private school fees, confidence among High-Net-Worth Individuals (HNWIs) in the UK economy has risen to 84%, the highest level in six years. Research exploring the VAT issue attributes this optimism to political stability and other positive economic indicators. However, wealthy families remain cautious, citing concerns about taxes, inflation, and interest rates.
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Conclusion
The introduction of VAT on private school fees, coupled with rising costs, has caused notable concern among affluent families. Over half of parents are reconsidering their children’s education plans. While some are exploring state schools as an alternative, others are even considering relocating abroad.
