Private School Fees Leave Families Earning £100k With Less Than Minimum Wage

Families earning an annual household income of £100,000 are finding themselves worse off than couples working full time on the national minimum wage if they send two children to private school, a new report has revealed. The financial strain has been exacerbated by the introduction of VAT on school fees, making private education increasingly unattainable for many middle-class families.

Analysis by financial planning firm Saltus illustrates the stark reality of schooling costs. The average annual day school fee for one child is approximately £18,064, according to the Independent Schools Council. Boarding school fees average £20,959 per year. With the addition of 20 per cent VAT, boarding school fees rise dramatically to £25,151 per child. However, some schools pass on only 14 per cent of this VAT, as surveys suggest. This still leaves families paying nearly £50,302 annually for two children at private day schools.

Saltus calculations show that to meet these costs while earning the UK’s median salary of £37,430 after tax, a household would require a gross income of £143,386 annually. Even families earning £100,000 and paying the average school fees would have significantly less disposable income than a couple earning the national minimum wage of £23,809 for a 40-hour week.

Parents are being forced to make tough financial decisions. Many are removing children from private schools, opting for cheaper alternatives, extending mortgages or relying on financial support from relatives. Others are sacrificing holidays and cutting discretionary spending to prioritise educational costs.

The Independent Schools Council has brought a judicial review against the government’s decision to introduce VAT on fees, arguing that it is discriminatory and infringes human rights. A ruling on the case is anticipated, but until a decision is reached, families continue to shoulder the burden.

One parent, John Williams, who earns £95,000 as a freelance translator, explains his financial situation. With two children in private school, his fees rose from £36,000 to £41,500 due to VAT. Now left with limited disposable income, he has cut back on family holidays and other expenses and plans to transition his eldest child to a state school for sixth form. Williams noted that while private schools offer bursaries, not all operate like genuine charities, and their prior tax exemption status was highly contentious.

Private education, once within reach for professionals such as doctors and lawyers, has increasingly become a luxury fewer can afford. The introduction of VAT has heightened financial tension for thousands of families who had prioritised education as a key investment in their children’s future.