Families earning over £100,000 now left with less than minimum wage to live on after private school fees

• To maintain average UK earnings after paying school fees for two children, a family would need gross income of nearly £150,000
• Total cost of sending two children to a private day school forecast to surpass £1 million for the first time next year – for children starting school in September 2026
• Lifetime impact of VAT on the cost of sending two children to private day school stands at £188,972

30th April 2025, London – Families earning more than £100,000 a year are now taking home less than the national minimum wage after paying private school fees, following the introduction of 20% VAT on independent education.

New analysis from financial planning firm Saltus reveals the true cost facing families who aspire to send their children to private school.. The average annual day school fee in 2024 rose to £20,959 per child1, increasing to £25,151 when VAT is added. This means a family with two children now face a yearly bill of £50,302 for tuition fees alone – all paid from post-tax income.

To simply cover the VAT inclusive fees, a household must earn a gross income of £68,526. But to afford fees and still take home the UK’s average post-tax salary of £37,4302 per person, a family would need to earn £143,386 a year.

Households on low six-figure salaries are feeling the pressure. After paying school fees for two children, a couple earning £100,000 would now be left with less disposable income than a couple earning the national minimum wage (£23,809 per person3), with the required gross household income to meet the minimum wage standing at £116,144. These income requirements are based on two working parents each earning the same salary, and do not include pension contributions or other pre-tax deductions such as student loan repayments. 

Recent findings from the Saltus Wealth Index Report reflect this squeeze. 15% of parents say they have had to remove their child from private school due to the rises, while four in ten (37%) are having to find a cheaper school or ask for help from family to cover the extra cost. Of the 48% of parents who say they will continue to send their children to private school, 76% say they have, or will have, to make changes or sacrifices in order to allow for the additional VAT on private school fees. These include forgoing holidays (41%), cutting down on everyday spending (37%) and even extending their mortgages (17%).

Changes to education policy – including the introduction of VAT on private school fees – are now among the top five reasons high net worth individuals regret voting Labour at the last General Election, according to the Saltus Wealth Index Report.

Mike Stimpson, Partner at Saltus said: “Private education has historically been within reach for professionals like doctors, lawyers and business owners – those working long hours and earning what used to be considered a strong, reliable income. But with VAT now added to school fees, 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. Planning your finances well in advance of needing to pay for school fees is now absolutely essential if sending your children to private school is a priority.”

John Williams, 36, earns £95,000 a year and has two children at private school. Before VAT, his 13-year-old daughter’s fees were £19,500 a year and his nine-year-old son’s were £16,500. With VAT now added, that total cost has risen to £41,500 – leaving him with very little after tax and national insurance. 

He said: “With school fees rising to £41,500 after VAT, a huge share of my £95,000 salary now goes straight to education costs. We’ve had to tighten our budget significantly – swapping holidays and cutting back where we can – and we’re likely to move our daughter to a state school for sixth form. That said, I do understand the argument around charitable status for private schools; while some offer bursaries, many don’t function like true charities, so the tax exemption was always on shaky ground.”

Total lifetime cost of private education for day pupils approaches £500,000 per child

The total lifetime cost of sending one child to a private day school today has reached £476,399 once VAT is added and assuming a 5% annual fee increase. The cost for two children stands at £952,798, but new Saltus research forecasts it to surpass £1m for children starting primary school next year (in September 2026), where the lifetime cost per child rises to £500,219 (£1,000,438 for two children).

Had VAT not been applied to school fees, the lifetime cost per child would have totalled £381,913 (£763,826 for two children). The true impact of VAT on the cost of sending two children to private day school therefore stands at £188,972.

For parents opting for boarding school for the duration of their child’s education, starting from age five, the total lifetime cost now stands at £930,325 per child – £1,860,650 for two children.

The numbers behind the squeeze – day pupils

Pre-VAT costs (2024 figures1):

• £20,959: Average annual private school day fee per child
• £41,918: Cost for two children
• £54,070: Gross income needed to cover fees alone
• £101,688: Gross income needed to cover fees + minimum wage take-home (£23,809)
• £128,930: Gross income needed to cover fees + UK average salary take-home (£37,430)

Post-VAT costs:

• £25,151: Average fee per child with 20% VAT
• £50,302: Total cost for two children
• £68,526: Gross income needed to cover VAT-inclusive fees alone
• £116,144: Income required to cover fees + minimum wage take-home (£23,809)
• £143,386: Income required to cover fees + UK average salary take-home (£37,430)