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If you have children at private school, you will probably have already paid the first instalment of this year’s fees. But if you’re still saving for your children to go in the future, or you’re thinking about how you can maximise your savings for future years, there are several things you can do, and some extra costs you might face.
The first payment you will face will be a registration fee, which you would usually pay at least a year in advance of your child starting at the school. Then there might be exam fees, if your child needs to pass an entrance exam to enter the school, and if they passed, you may also have had to pay a deposit to secure the place.
School fees have been rising, and the addition of VAT to school fees for the first time in January 2025 has made things even more expensive. Figures from the Independent Schools Council show that from January this year, the average fee for a day school is £6,226 per term, or £18,678 per year, while for boarding school, it’s £14,980 per term, or £44,940 per year.
These are significant sums, and there are various ways you can save for these in the future and reduce these fees where possible. If your child is already attending the school, or is about to start, then it would be worth seeing if they qualify for any scholarships or bursaries. These might be given to children with exceptional sports or writing skills, for example. Or they could be based on affordability criteria, and accessing them would depend on how much your family is earning. You may even find you can get a discount on fees if a parent works at the school, or one of the parents is in, say, the Armed Forces or the church.
The best way to prepare for these fees is to start saving as early as you can. If your child is on the cusp of attending, this doesn’t help so much, but there is always the option of asking if their grandparents can help with the fees. This has a double benefit: not only does it give you the assistance of someone else paying for part of the fees, but also, if they make it a regular contribution, this could be considered a gift from income, which would remove it from their estate for inheritance tax purposes.
What else can you do to save for school fees?
Saving into a stocks and shares ISA means money will grow tax-efficiently, and by investing in the stock market you have the best chance of it growing to meet the fees when the time comes. As you get closer to when you need to use that money, you will need to reduce the risk you’re taking with those investments, so it would be worth finding the best interest-paying cash ISA accounts you can. Once you’ve used all your ISA allowances, you may want to consider setting up a bare trust.
Sarah Coles, head of personal finance at AJ Bell, said: “You can set up a bare trust, investing on behalf of the child. The money put in the trust counts as being given away immediately for tax purposes. Money left in the trust belongs to the child at the age of 18, but the trustees can access money before then, as long as it’s for the benefit of the child. Some people will withdraw money to pay school fees.
“Income and gains are classed as belonging to the child, so in most cases they fall into tax-free allowances. The major pitfall, however, is that if a parent pays into the trust and income is £100 or more a year, it’s taxed as belonging to the parent. It’s why it’s usually a more suitable option for gifts from grandparents, or where investments don’t produce income.”
No matter whatstage of the school fees journey you’re at, you should take some advice ifyou’re not sure how to make the best of your savings to cover all the schoolfees you’re facing for each of your children.
Let us help you
If you want some help saving for or dealing with school fees, then please get in touch with us and we will do what we can to help you.