The number of private schools entering administration has increased by 50% in the first half of this year according to The Times following the introduction of VAT on private school fees. The independent education sector is under further pressure as, from April, private schools with charitable status are no longer eligible to claim business rates charitable relief, meaning that they must now also pay business rates on their buildings. 

With inflation still high and many families struggling with the rising cost of living (including high earners), schools are forced to decide whether to pass on the full cost of the additional tax burden or to bear the brunt of the tax rises themselves. By sheltering families from the full force of these additional costs, private schools are finding themselves in a difficult position financially and in many cases unable to pay their debts. The department for education has reported that 77 independent schools have closed in England since the new VAT levy was announced in 2023.

Further, as private schools look to cut costs and reduce facilities, the offering for parents paying increased school fees is less attractive than before. The Times reports that the latest school census reveals the number of children at independent schools has dropped in 2025 for the first time since the pandemic by 1.9% (11,009 pupils). According to the Independent Schools Council, it is reasonable to assume that the majority of those pupils have been absorbed by the state school system. The decline in private school pupil numbers is further evidence of the ongoing strain facing private schools, even amongst those which are currently continuing to trade. 

The increase in administrations for private schools is an indicator that there is value to be realised in these schools – whether through the merger of schools in similar local areas, or through a sale of the land and buildings. However, it is clear that independent schools are facing significant challenges following these new government levies. The schools that survive will need to streamline their business model and maintain focus on financial forecasts, while carefully managing price rises for parents to keep the school doors open. While it seems likely that the elite private schools for the ultra-rich will survive unscathed, smaller and lesser-known schools are likely to be feeling the pinch.