How to reduce private school fees

There’s no avoiding it; private schools come at a cost. Regrettably, this puts private education totally out of reach for some families. For other parents, there’s a worry about the financial strain they’d put themselves under by committing to years of private school fees.

It’s no wonder you’re probably asking yourself: can school fees be reduced? Are there any canny ways to cut the cost for those in the know? Let’s look at ways parents can reduce the burden of independent school fees.

How much do private schools cost?

A piggy bank, papers and a calculator.

The fees charged by independent schools can vary vastly across the UK, and where a school sits on the scale of school fees will depend on several factors. The least expensive private school in the country is Abrar Academy in Lancashire, charging just £3,000 for boarders and £1,500 for day pupils for a year in 2022. At the opposite end of the scale, Brighton College in East Sussex has a rising annul fee for pupils, culminating in a hefty £57,690 for a student from overseas to study in the upper 6th form.

These figures give a couple of clues about where savings can be found on school fees, with the most expensive often found in London and the South East, and more affordable options towards the north or further from major cities.

One of the biggest decisions you can make to reduce the cost of school fees is choosing a day school rather than a boarding school. But don’t forget to take everyday expenses into account when you choose a day school – these include travel to school, meals and laundry at home, and other costs you’d have to fund.

Where a school sits on the scale of school fees will depend on several factors, like where they are in the country, the facilities they offer, and the prestige of the establishment.

How do private schools run? How do they make their money?

Public money to public schools

Private schools in the UK get almost all their funding from school fees. Unlike state schools, they don’t receive any direct funding from the government to teach the pupils who enrol.

However, some public money does make its way to private schools. Lots of independent schools in the UK operate as charities. This means all school fees are invested in the children’s education or the school’s facilities, rather than going to owners in profits. And charitable status gives independent school a hefty tax break.

In return for charitable status, private schools are under a legal obligation to give back to the community, and some do this through initiatives like the Music and Dance Scheme (MDS). This government-funded scheme provides help for state-school children who are talented in music and dance, so they can access specialist training from one of eight of the country’s top schools.

Similar schemes operate for subjects that aren’t typically taught in state schools. The Latin Excellence Programme and the Mandarin Excellence Programme each pay private schools to give teaching time to pupils from local state schools.

Private schools welcome the public

Another source of revenue for some private schools is to open their doors for members of the public. With pupils in lessons during much of the school day, the school can earn extra revenue by providing gym or swim memberships, rather than letting their high-quality outfits stand empty.

And it isn’t just sports facilities that welcome the public. With top quality performing departments, many independent schools, like Hurtwood House, make theatre tickets to their stage productions publicly available, too.

Extensive grounds make ideal locations for summer holiday activities, so private schools often rent out their spaces to companies offering sports, arts, or children’s holiday clubs during the school holidays. Godolphin School in Salisbury plays host to external companies offering holiday clubs and swimming courses to youngsters outside of term time. Meanwhile Bryanston School, with its music specialism, hosts musical societies and courses during school holidays.

And set in former stately homes, some private schools also host weddings in their picturesque grounds.

Schools on film

Speaking of those beautiful locations, public schools also play host to film crews who come to make the most of the historic buildings and idyllic grounds. Rugby School hired out its space to feature in the BBC’s Tom Brown’s Schooldays, and Sompting Abbots took a starring role in 2018 rom-com Old Boys.

Hidden treasures lead to world-class facilities

With long histories attached to them, public schools occasionally make incredible (and lucrative) finds within the very fabric of their buildings.

Canford School once discovered an ancient Assyrian frieze built into its tuck shop, the sale of which financed both a brand new theatre and a top quality sports facility. The school is now able to welcome premier-league football team AFC Bournemouth for training, with the team reserving one of the school’s pitches exclusively for their use.

And in the run-up to the 2022 Commonwealth Games, the Fiji Rugby Sevens team chose Canford’s sports grounds for their pre-tournament training and acclimatisation.

School fees make private school feasible

But whilst private schools maximise their potential income with a wide range of these ‘extra-curricular’ activities, they don’t go far towards subsidising a private education. The lion’s share of a private school’s budget still comes from school fees.

Are public funds available to help parents with the cost of private school education?

A jar filled with money labelled 'education'

For some groups of children, public funding is available to help parents reduce the cost of private school fees.

Continuity of Education Allowance

The Continuity of Education Allowance (CEA) is a scheme by the government to ensure children whose parents serve in the armed forces or diplomatic service don’t have their education disrupted when their parents are posted abroad for work.

Through the CEA, parents in the military can send their child to their chosen private school for only 10% of the usual fees. Some schools, like Ampleforth College, offer an additional discount for children of service personnel, and other schools even advertise places to attract families who are eligible for this funding.

CEA allowances for the academic year beginning Autumn 2021 stand at £6,096 per term for junior school and £7,847 for senior students, making a hefty dent in the cost of school fees.

Private school funding for children with Special Educational Needs or Disabilities (SEND)

There are circumstances where the local authority will fund a child’s place at a private school. If your child has special educational needs or disabilities and an independent school is listed in section 1 of your child’s EHC plan, it’s possible that the Local Authority (LA) will pay the school fees. But only if there’s no other school nearby that’s suitable for your child to attend. This is because the LA remains responsible for your child’s special educational provision, and will foot the bill if there’s no viable state school alternative.

What are the options for reducing private school fees?

Sibling discounts at private schools

If you have more than one child, it’s worth remembering that many schools offer a sibling discount, which can help parents make significant savings on the cost of school fees. But how can you minimise the cost of private school for each child?

Scholarships and bursaries

It can be difficult to minimise the expense of private school fees, but did you know that bursaries and scholarships are often available

Bursaries are a means-tested discount on fees to help out families who’d otherwise be unable to afford the costs. A bursary can reduce the amount parents have to pay by anything from 5% to 100%.

Scholarships are awarded to children who achieve particularly excellent results in certain subjects. They may represent a significant reduction in school fees, or they may be only a token award for the student.

Advance payment schemes

Just like car insurance, school fees can be cheaper if you pay upfront, rather than in instalments.

If your chosen private school offers an advance payment scheme, parents can make savings over the course of their child’s education by paying the entire fee upfront. Although this is likely to mean an eye-watering bill, it protects your family from future rises in school fees, which can be considerably faster than inflation.

Advance payment schemes for private school fees work because the school invests the lump sum in safe investments like government bonds or fixed interest stock. The school receives interest on their investment without paying tax, thanks to its charitable status, and therefore earns a better Return on Investment (ROI) than a parent could access.

Are school fees tax deductible?

The short answer is no. If you complete a self-assessment tax return, private school fees are not a deductible expense. However, there are ways to make paying school fees more tax efficient.

Paying private school fees through a limited company

Parents who are company directors can reduce the cost of private school by paying a child’s school fees as a benefit to employees. As a director, you count as an employee. If that sounds shady, don’t worry, it’s perfectly legal. Here’s how it works.

When your company pays school fees (and always remember, they need to go directly to the school), your company reports it as a benefit – just like a company car or private medical cover.

The company then pays National Insurance (NI) on the value of the school fees, and the NI is covered as part of the cost of doing business. Is it worth paying school fees through a limited company? Yes, because the company would pay more in tax if this value went through PAYE as a salary increase.

Age and wisdom: grandparents paying school fees

A child running towards his grandparents

If your child’s grandparents are worth more than £500,000 (financially speaking, that is. We know grandparents are priceless), their estate could end up paying significant amounts in inheritance tax.
Astute grandparents like to get around this by sharing their wealth with their family during their lifetime. Each grandparent can gift a grandchild up to £3,000 per year – so if your child has four grandparents, that could be a tidy £12,000 towards their private school fees each year.

Reducing the impact of independent school fees on your lifestyle

Ultimately, there are ways to reduce the cost of private school fees, but without the benefit of a 100% bursary or a 90% funded place through the CEA, the ways to cut the cost of an independent education can be limited.

But if you can’t reduce the fees themselves, what you can do is reduce the impact school fees have on your finances. With clever planning, you can fund your child’s dreams without sacrificing your own.

At Eden Planning, we help parents make private school affordable by creating a School Fees Plan. So you can fund your child’s private education and still look forward to an early retirement or that place in the sun. Get in touch to discover the possibilities.