Families earning £100,000 a year are left with less disposable income than those on minimum wage if they send two children to private school, according to new analysis by financial planning firm Saltus.
The introduction of VAT on private school fees has pushed costs sharply higher, leaving even high-earning parents struggling to cover education costs without making significant sacrifices.
Saltus said families now face an average annual fee of £50,302 to send two children to day school once VAT is applied. Based on current tax rates and household outgoings, a gross income of nearly £150,000 would be required to cover those fees and still retain the UK median disposable income of £37,430 per person.
By comparison, a couple earning the national minimum wage — £23,809 each for a 40-hour work week — would have more disposable income than a household on £100,000 paying private school fees for two children.
Saltus partner Mike Stimpson said: “Even those earning six figures are facing incredibly difficult financial decisions. These are people who have budgeted carefully, planned responsibly and prioritised education, but now they find themselves in a position where earning £100,000 is no longer enough to afford the education they aspire to for their children.”
The figures are based on the Independent Schools Council’s (ISC) most recent census, which found the average annual day school fee is £18,064 per child, or £20,959 for boarders. Saltus factored in VAT of 20%, although schools have reportedly passed on around 14% on average to parents so far.
A pending judicial review, brought by the ISC and others, is challenging the government’s decision to impose VAT on private school fees. They argue the move is discriminatory and infringes human rights, with a ruling expected soon.
Saltus said some families had already taken action — removing children from private school, opting for more affordable options, or seeking financial help from relatives. Others are cutting holidays or extending mortgages to cope.
John Williams, 36, a freelance translator earning £95,000, said his children’s fees rose from £36,000 to £41,500 after VAT.
“We’ve had to tighten our budget significantly. We’re likely to move our daughter to a state school for sixth form,” he said.
“While I understand the argument about charitable status for private schools, many don’t function like true charities — so the tax exemption was always on shaky ground.”
With private school enrolment under renewed financial pressure, the VAT policy is reshaping household budgets — and sparking debate about who should shoulder the cost of education.
