VAT on Fees Puts 'Profound' Pressure on Private Schools

By the Editorial Team · Tuesday, September 29, 2026

Private schools in the UK are facing financial difficulties and over 100 closures since the introduction of a 20 percent VAT on tuition fees in January 2025, which has led to higher costs and declining enrolment, particularly among smaller institutions. This tax policy, intended to fund state education improvements, has prompted a shift of some families to public schools and intensified collaboration efforts between private and state sectors to mitigate community impacts.

Private schools in the United Kingdom are experiencing significant financial strain following the introduction of a 20 percent value-added tax (VAT) on tuition fees, according to Anne Cotton, chairman of The Heads’ Conference (HMC). Speaking at the HMC annual conference in Manchester, Dr. Cotton, who is also head of King’s College School in Wimbledon, described the past two years as particularly challenging for many independent schools, especially smaller institutions serving less affluent communities.

The HMC, which represents over 300 prominent independent schools including Eton and Harrow, has noted closures within the sector that have reverberated through local communities. Dr. Cotton acknowledged the deep impact of these shutdowns on students, families, school staff, and the broader networks connected to the schools. “I have joined divisional meetings where the shock and impact of the closure of a neighbouring school have been tangible,” she said.

The VAT on fees, introduced by the Labour government in January 2025, was justified by officials as a measure to generate funds for improvements in the state education system, including the hiring of 6,500 additional teachers. Despite these aims, the tax has placed financial pressure on many private schools, particularly smaller and more affordable ones, which have had to increase fees to cover the added cost. This has led to a decline in enrolment as some families have been priced out of private education and moved their children to the state sector.

Data compiled by the Independent Schools Council (ISC) indicates that more than 100 private schools have closed since the policy’s implementation, and a January 2026 census reported a decrease of approximately 30,000 pupils attending private schools nationwide. Recent closures over the summer included Avon House School in Essex and Sompting Abbotts Prep School in West Sussex.

Despite these challenges, Dr. Cotton emphasized ongoing collaboration between independent schools and state schools, charitable organizations, and local communities. She highlighted the existing “powerful partnership work” involving shared resources, facilities, and extracurricular opportunities. Looking ahead, she said the HMC aims to increase visibility of these positive contributions while continuing to address the sector’s difficulties.

A spokesperson for the government responded by attributing the decline in private school enrolment to broader demographic trends rather than the VAT policy alone. They noted that primary school pupil numbers have been decreasing since the 2018/19 school year, a pattern that predates the introduction of the tax.

As the sector navigates this period of adjustment, leaders in private education seek to balance advocacy efforts with pragmatic responses to the evolving landscape shaped by fiscal policy and demographic shifts.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.