A year and a half after VAT implementation, the UK private school market has split into three tiers. The most selective day schools (Westminster, St Paul's, City of London, Eton) absorbed VAT into the fee and demand remained strong. Mid-market schools have compressed margins. Smaller and more vulnerable schools have either merged or, in a small number of cases, closed.
The market shift
A year and a half after VAT implementation, the UK private school market has split into three tiers. The most selective day schools (Westminster, St Paul's, City of London, Eton) absorbed VAT into the fee and demand remained strong. Mid-market schools have compressed margins. Smaller and more vulnerable schools have either merged or, in a small number of cases, closed.
State sector pressure
The migration from private into state schools has been less dramatic than some forecasts suggested. Most predicted 20 to 40% private-to-state migration; actual movement has been closer to 10 to 15% in most local authorities.
International families
International families remain a meaningful demand pillar for premium UK boarding schools. The VAT increase has not changed the relative attractiveness for the most-sought-after schools. Mid-market boarding has felt more pressure.
Grammar school surge
In grammar-school areas, demand for selective state grammars has increased materially. 11-plus competition has intensified.
Outlook
The 2025 to 2026 adjustment is largely complete. Most analysts expect modest fee growth in line with broader inflation through 2027 to 2028.