Over half of parents with children studying in private schools look set to be affected by the imposition of VAT on school fees. VAT will be introduced in private school fees from January. So, many High Net Worth Individuals (HNWIs) are planning to move their children out of private schools and into 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 about private school fees, confidence among HNWIs in the UK economy has risen to 84%, the highest level in six years. According to the same research that looked at the VAT issue, this increase stems from a sense of political stability and is reflective of other positive economic indicators. However, many wealthy families remain worried about taxes, inflation, and interest rates.
Conclusion
The introduction of VAT on private school fees and the overall rise in costs have caused significant concern among wealthy families. Many are rethinking their children’s education plans. Over half of parents worry about the impact of VAT. Some are even considering moving their children to state schools or relocating abroad.
