From 1 January 2025, private school fees in the UK became subject to 20% VAT. For many families, that change — combined with annual fee inflation of 2–6% — has significantly increased the total cost of independent education and prompted a serious look at alternatives.

This guide explains every realistic option available to UK families right now: staying in the independent sector at lower cost, moving to state schools, switching to online private schooling, home education, hybrid learning, and rethinking boarding. It also covers what the VAT change means in financial terms and which options are exempt.

What the VAT change on private school fees actually means

From 1 January 2025, all education and boarding services provided by private schools became subject to VAT at the standard rate of 20%. Anti-forestalling rules apply from 29 July 2024, meaning advance payments for later terms could also fall within scope — full details are in the UK Parliament's VAT on private school fees briefing.

In practice, most families do not see the full 20% added to their bills. The government estimates average fee increases of around 10%, because many schools are absorbing part of the cost, reclaiming VAT on capital expenditure, or phasing in increases. Individual schools vary considerably depending on their reserves, pupil numbers, and demand.

What this looks like in numbers:

A typical independent day school charging £16,500 in 2024 may now cost £19,000–£20,000 in 2025, before extras. A boarding school charging £35,000–£40,000 may move to £40,000–£47,000 once VAT applies to both tuition and boarding.

What is exempt:

• State-funded schools — no VAT applies

• Standalone private nurseries and pre-schools serving children primarily below compulsory school age

• Independent one-to-one private tuition (VAT-exempt under current HMRC rules)

• State boarding schools — tuition remains state-funded; parents pay only the boarding element

The government has also removed business rates relief for charitable private schools from April 2025, adding further financial pressure — particularly on smaller independent schools.

Option 1: Stay in the independent sector at a lower cost

Many families still want an independent school environment but need to reduce their annual outlay. The most common approaches:

Switch to a lower-fee independent school

There is significant variation in independent school fees across the UK. Moving from a £20,000+ day school to one charging £10,000–£14,000 can substantially reduce the impact of VAT. Smaller schools often offer solid teaching without premium sports facilities, theatres, or extensive pastoral programmes — which may or may not matter for your child.

Move from boarding to day

If your child is currently a full boarder, switching to weekly boarding, flexi-boarding, or a day place at the same school can reduce fees considerably. Many boarding schools are accommodating this shift as demand patterns change.

Apply for bursaries, scholarships, and hardship funds

Many independent schools offer means-tested bursaries or emergency hardship funds. These are often not prominently advertised — they are commercial decisions made school by school. Ask the bursar directly, not the admissions office. Sibling discounts are also worth requesting if you have more than one child at the school.

Factor in the real cost

Before assuming a cheaper school saves money, calculate the full annual spend: transport, uniforms, sports tours, music lessons, devices, exam fees, and trips. Around half the savings from a lower-fee school can disappear if these costs are higher.

One structural risk worth noting: the government estimates that VAT may lead to around 100 additional school closures over the next three years, beyond normal turnover. Many schools are exploring mergers to manage financial pressure. If your child's school is small or already operating with thin margins, it is worth monitoring its position before committing to another full year.

Option 2: Move to a state school

The state sector is a serious option, not a fallback. State-funded schools — including grammar schools and state boarding schools — charge no fees and are entirely exempt from VAT. University Technical Colleges and Studio Schools also provide specialist and vocational education at no cost.

The government estimates around 35,000–37,000 pupils may leave private schools as a result of VAT, with most expected to move into state schools.

How to make the transition:

1. Contact your local authority admissions team and ask about in-year availability

2. Check catchment boundaries and oversubscription criteria for secondary schools

3. Apply to several schools, not just your first choice

4. Accept a fallback offer while pursuing an appeal if your preferred school is full

5. Standard entry points (Reception, Year 7, Year 12) have the most availability — mid-year moves depend on places

What you gain and what you lose:

State schools eliminate tuition costs and often offer a broader, more socially diverse peer group. The trade-off is typically larger class sizes, less flexibility around pastoral support, and — in competitive areas — limited availability at popular schools. If your child has an EHCP and the local authority funds their place at an independent school, they can reclaim the VAT charged on those fees, which you should confirm with your LA.

Option 3: Online private schooling

Online private schools have grown significantly as a category precisely because they remove the cost structures — buildings, grounds, commuting, uniform — that inflate traditional independent school fees, while retaining qualified teachers, structured timetables, accredited curricula, and formal assessments.

Full-time online schooling in the UK is subject to VAT, but fees are typically substantially lower than those of physical private schools because of reduced overhead.

What a quality online private school provides:

• Live teacher-led classes on a fixed weekly timetable

• Recorded lessons for catch-up and revision

• Accredited curriculum aligned to recognised exam boards

• Formal assessments and progress tracking

• Parent dashboards with real-time data

• No uniform, no commuting, no building-related charges

Teneo International School delivers accredited Pearson Edexcel and British International curriculum programmes through live virtual classes, hybrid formats, and on-demand recorded lessons. Its Smart School System™ tracks engagement and progression daily — providing the kind of visibility that parents in traditional schools often lose once children move to secondary school. Teneo reports average mark improvements of 12% in year one and up to 25% by year four.

This model suits families managing health needs, intensive extracurricular commitments, travel, or children who perform better outside the social pressures of a traditional school environment. Teneo's inclusive admissions approach also supports neurodiverse learners — 30% of admitted students are neurodiverse.

Illustrative cost comparison:

A child leaving a £20,000/year day school (post-VAT) and moving to an online private school in the £4,000–£8,000/year range, with no commuting or uniform costs, could save £13,000–£17,000 annually while maintaining accredited, teacher-led education.

Option 4: Home education and hybrid learning

Some families are choosing full home education; others prefer a hybrid model that combines structured online schooling with local activities, tutors, and community learning.

Full home education places complete responsibility for curriculum, teaching, assessment, and record-keeping with the parent. Independent one-to-one private tuition is VAT-exempt under current HMRC rules, so some families use tutors for specific subjects while managing others themselves. See the for the legal framework.

Hybrid learning is the more common approach post-VAT. A typical model might look like:

• Teneo Online School for core academic subjects (Maths, English, Sciences, Humanities)

• Local tutors for one or two specialist subjects

• Weekend sport, music, and community activities for social development and enrichment

This approach eliminates commuting and significantly reduces fees while preserving structured teaching, qualified oversight, and formal progression. It is particularly well-suited to children with anxiety, health needs, or demanding extracurricular schedules.

If your child has an EHCP, ensure any home or hybrid arrangement covers the provision set out in the plan. Local authorities are not required to fund specialist SEN support for home-educated children without an EHCP, but they should consider it where needs are documented.

Option 5: Rethinking boarding school after VAT

Boarding schools now face VAT on both tuition and boarding, making an already premium product materially more expensive. Families paying £35,000–£45,000 per year may be looking at £42,000–£54,000 once VAT and fee inflation are applied.

Lower-cost boarding alternatives:

• Weekly boarding — home at weekends, reduces the total boarding charge

• Flexi-boarding — agreed nights per week or term, at a reduced rate

• Day place at a boarding school — access to facilities and pastoral structures without the residential cost

• State boarding schools — tuition is state-funded; parents pay only the boarding fee, typically £12,000–£16,000 per year

• Online schooling plus residential programmes — term-time online education combined with holiday camps, outdoor education courses, or arts intensives for the social and residential experience

When reviewing boarding options, calculate the total annual cost including travel, exeats, and any extras — not just the headline boarding fee.

Comparing total costs: what you actually spend per year

Do not compare headline fees alone. The real question is total annual spend per child.

The gap between a mid-range independent day school and an online private school — once all costs are included — is often £15,000–£25,000 per year, per child.

Practical steps for making a school change

Changing your child's school mid-education requires care, but it is manageable with a clear process.

1. Review your current contract. Check notice periods — most independent schools require one term's notice, sometimes with a fee in lieu

2. Calculate your real annual cost after VAT, not just the tuition line

3. Compare options properly. Attend open events — virtual and in-person — before deciding

4. Ask about bursaries and hardship funds at your current school before leaving

5. Confirm curriculum, assessment, and exam routes at the new provider

6. Transfer records. Ensure reports, assessment data, SEN documentation, and any EHCP paperwork follow your child

7. Involve your child. Age-appropriate conversations about friendships, routine, and what stays the same reduce anxiety about transitions

With Teneo Online School, the onboarding process is designed to be straightforward: enrolment, placement guidance, device and connectivity setup, and a first-week orientation to establish a routine.

Frequently asked questions about private school VAT and alternatives

Does VAT apply to all private schools in the UK? Yes, from 1 January 2025. VAT at 20% applies to education and boarding services at all private schools in England, Scotland, Wales, and Northern Ireland. State-funded schools are exempt.

Are private nurseries affected by VAT? Standalone private nurseries and pre-schools that primarily serve children below compulsory school age (under 5) are exempt from VAT. Schools that include a nursery as part of a broader fee-paying provision may be partially affected — check with the school directly.

How much are private school fees rising because of VAT? The government estimates an average increase of around 10%, rather than the full 20%, because many schools are absorbing part of the cost or reclaiming VAT on capital expenditure. Individual schools vary — some have passed through the full amount; others have held increases below 10%.

Is online schooling subject to VAT in the UK? Yes, full-time online private schools are subject to VAT in the UK. However, because their fee base is lower to begin with — no buildings, grounds, or commuting costs — the total annual cost typically remains well below that of a traditional independent school post-VAT.

Can I deregister my child from private school and home educate? Yes. Write to the headteacher formally requesting deregistration. The school must remove your child from its roll. You are then responsible for providing suitable full-time education. If your child has an EHCP and attends a special school, you must obtain local authority approval first.

What happens to children with EHCPs at private schools? Where a local authority has placed a child with an EHCP at an independent school, it can reclaim the VAT charged on those fees. Where parents have chosen and funded the private placement themselves, the VAT applies to their fees in the usual way.

Will private schools close because of VAT? The government estimates VAT may lead to approximately 100 additional school closures over the next three years beyond normal turnover. Many smaller schools are exploring mergers. If your child's school is financially stretched, it is worth monitoring before committing to a further year.

What is a state boarding school and how does it work? State boarding schools are state-funded schools that offer boarding. Tuition is free; parents pay only for boarding, typically £12,000–£16,000 per year. Places are competitive. A list of state boarding schools is available through the State Boarding Schools' Association.

Where to get further information

• UK Parliament briefing: VAT on private school fees

• HMRC guidance on VAT for private schools

• Gov.uk school admissions guidance

• Gov.uk home education guidance

• State Boarding Schools' Association

If you are considering an online private school as an alternative, Teneo International School's admissions team can walk you through curriculum options, delivery formats, fees, and how their model compares to your current provision.