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 showed the scale of impact the decision to levy VAT on private school fees could have. The study looked at 2,000 HNWIs and found that 993 parents had kids studying in private schools.
- 55% of these 993 parents worried that the rise in fees will impact their children’s education
- Only 15% of parents said their children would remain in private education despite the fee hike 20% of parents plan to switch their children to a cheaper school within the next academic year
Are HNWIs Unhappy with VAT on Private School Fees?
According to an expert, the new government’s decision to add VAT to private school fees is unpopular among wealthy families, especially because it will take effect from January rather than at the start of the next academic year.
Even before the VAT announcement, price rises of recent years had been squeezing parents and hindering their ability to pay for their children’s private education.
What Is the Impact on the Larger UK Economy?
Despite concerns surrounding private school fees, confidence among High-Net-Worth Individuals (HNWIs) in the UK economy has reached 84%, marking its highest level in six years. Research examining the VAT issue attributes this optimism to a sense of political stability and other positive economic indicators. However, wealthy families remain cautious, citing taxes, inflation, and interest rates as ongoing concerns.
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Conclusion
The introduction of VAT on private school fees, coupled with rising costs, has sparked significant unease among affluent families. Many are reevaluating their children’s education plans, with over half of parents expressing concern about the impact of VAT. Some are considering moving their children to state schools, while others are contemplating relocation abroad.