School Fees Planning for High-Net-Worth Families: Strategies for 2026 and Beyond

Private education has always represented a significant financial commitment for UK families, but from 1 January 2025 the cost increased materially with the introduction of 20% VAT on independent school fees — the first time in history that VAT has applied to private schooling in the UK. For families with children at, or approaching, independent school age, this changes the planning calculus substantially. Families that had not yet made funding arrangements, and those whose existing plans were based on pre-VAT fee levels, will need to revisit their approach.

The current cost of independent schooling

Before the VAT change, typical independent school fees in the UK for 2024/25 were:

• Day school: £15,000–£35,000 per year depending on school and location, with London and the South-East at the upper end
• Boarding school: £38,000–£60,000 per year for full boarding

From January 2025, these figures increased by 20% on the school fees element. Some schools absorbed a portion of this through fee reductions or efficiency savings, but the net effect for most families was an increase of 15–20% in annual costs. A family paying £22,000 per year for a London day school now faces a bill approaching £26,400. A full boarding school at £48,000 now costs £57,600.

For a family with two children across 13 years of primary and secondary schooling, the total cost of independent education from reception through to A-levels — at current fee levels and assuming 3–4% annual increases from January 2025 — could reach £700,000 to well over £1 million in aggregate, depending on the schools chosen.

Total cost projections: working backwards

Effective school fees planning requires modelling the full expected cost from the point of planning to the expected end of education, taking into account:

• Current fee levels and likely annual increases (historically 4–6% per year; the VAT-adjusted starting point resets this calculation)
• Number of children and years of education remaining
• Whether boarding, day schooling, or sixth-form college is planned
• International schooling abroad if the family moves

The financial planner's role is to establish the total liability and then work backwards to identify the most efficient funding mechanism — whether through capital already accumulated, regular savings, investment income, or a combination.

Savings vehicles: the spectrum of options

Junior ISA (JISA): the simplest and most accessible wrapper. Children can receive up to £9,000 per year in JISA contributions (2026/27). Investment growth and income are free of tax. On reaching 18 the account converts to an adult ISA under the child's control — which may not align with school fees timing if contributions began in infancy. The JISA is most suited to early-start, long-horizon accumulation for secondary or university fees.

Investment bond assigned to child: an offshore portfolio bond can be assigned to a child for the purposes of school fee funding. If structured correctly, the bond's gains are assessed on the child rather than the parent, potentially at a lower tax rate (or within the child's personal allowance and basic rate band). The rules on parental settlements must be observed — income from a parental gift is still taxed on the parent where it exceeds £100 per year per parent. Assignment structures should be reviewed by a tax specialist.

Offshore portfolio bond: for high earners who have exhausted pension and ISA allowances, an offshore bond provides a tax-deferral mechanism. Gains accumulate without annual income tax or CGT within the bond. On encashment, the chargeable gain is subject to income tax (potentially at a lower rate if the bond is surrendered in a year of lower income, or assigned to a lower-rate taxpayer). The top-slicing provisions can reduce the effective tax rate on a large maturity gain.

Discretionary trust: a discretionary trust established by grandparents or other family members (not parents — to avoid the parental settlement rules) can accumulate funds for school fees. The trustees have discretion over distributions and timing. Inheritance tax advantages may arise where the contributions are within the settlor's annual gifting allowances. Trust taxation is complex and the setup and ongoing compliance costs make this most appropriate for larger amounts.

Regular savings into a general investment account: the simplest approach for those with available capital and relatively short time horizons. Gains within the annual CGT exemption (£3,000 for 2026/27) are free of tax; gains above this are taxed at 18% (basic rate) or 24% (higher rate).

Starting early: the compound growth advantage

The power of starting school fees savings early is substantial. Assuming 5% net annual growth:

• £500 per month invested from birth reaches approximately £170,000 by age 18
• £1,000 per month invested from birth reaches approximately £340,000 by age 18
• Starting at age 10 rather than birth to reach the same £170,000 requires approximately £1,750 per month

For grandparents wishing to contribute, a gift of a lump sum in a Junior ISA or education trust on birth — even £20,000–£50,000 — compounds significantly over an 18-year horizon.

International schooling for globally mobile families

For families based internationally, the relevant fee levels depend on the local private education market:

Dubai (UAE): international school fees range from approximately AED 45,000 (around £10,000) for mainstream international curricula to AED 95,000 (around £21,000) or more per year for premium British curriculum schools. Fees are VAT-exempt in the UAE (education is zero-rated). Schooling in Dubai is generally regarded as high quality, and many British curriculum schools are inspected by KHDA and perform strongly.

Singapore: international school fees range from SGD 25,000 (around £15,000) to SGD 75,000 (around £45,000) per year, with the top-tier schools such as Tanglin Trust and United World College at the upper end. Singapore's education system is highly competitive, and demand for places at the leading international schools routinely exceeds supply — early registration is essential.

Thailand (Bangkok and Chiang Mai): fees at established British curriculum international schools range from approximately THB 300,000 to THB 700,000 per year (approximately £7,000–£17,000). Facilities are generally strong and expatriate community is well established.

Spain (Barcelona and Madrid): British and international schools charge €10,000–€20,000 per year for day schooling, with a wider range at boarding level.

Where families are internationally mobile, portability of educational philosophy matters — maintaining a consistent curriculum (typically British, International Baccalaureate, or American) makes transitions between schools in different countries less disruptive.

Tax planning: the grandparent strategy

One of the more commonly used school fees strategies involves funding from grandparents rather than parents, which sidesteps the parental settlement rules. A grandparent can establish a trust for the benefit of grandchildren, fund school fees directly as maintenance payments (exempt from IHT as normal expenditure out of income, if they meet the conditions), or gift capital to a bare trust from which school fees are paid from the grandchild's income and capital.

Each of these approaches requires careful structuring and ongoing compliance. The IHT treatment of gifts depends on the type of trust used and the timing of contributions relative to the seven-year rule.

Compliance note

The VAT treatment of independent school fees introduced in January 2025 is based on HMRC guidance current as of mid-2026; any appeals or legislative changes may affect fee structures going forward. School fee projections are illustrative and depend on actual fee increases by individual schools. Tax-efficient savings structures involve complex rules, and the suitability of any particular vehicle depends on your specific circumstances. Seek qualified financial and tax advice before implementing any school fees planning strategy.

How Global Investments Can Help

Global Investments works with internationally mobile families to plan for the cost of private education — whether in the UK or across our key markets including the UAE, Singapore, Thailand, Spain, Cyprus, and Greece. We model total education costs, identify the most tax-efficient funding structures for your circumstances, and integrate school fees planning within a comprehensive wealth management framework. Contact our private client team to discuss your education planning needs.