Independent School Bursaries After the VAT Change: Who Qualifies in 2026

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5. Independent School Bursaries After the VAT Change

Since 1 January 2025, independent school fees in the UK have carried 20% VAT for a full academic year, and that change has reshaped who applies for a bursary and how many families now qualify. Bursary eligibility is set by each school individually - there is no single national income threshold - but most schools assess gross household income, net assets and a fee-remission scale that runs from a small percentage discount to 100% of fees. This guide sets out exactly what changed on 1 January 2025, what the government has and has not promised about bursary funding, what the Independent Schools Council's 2025 census shows about fee assistance since VAT began, and how the published income thresholds compare at five named schools - St Paul's School, St Paul's Girls' School, Manchester Grammar School, Latymer Upper School and Exeter School - so you can see roughly where your own family might fall before applying for 2026-27 or 2027-28 entry.

What Changed: 20% VAT on Independent School Fees Since January 2025

The government removed the VAT exemption for private school fees with effect from 1 January 2025, adding the standard 20% VAT rate to tuition and boarding fees at UK independent schools. According to the Treasury figures published by the Department for Education's Education Hub, the measure is expected to raise £1.725 billion a year for the public finances. An anti-forestalling rule closed the obvious workaround: any fees paid from 29 July 2024 onward that related to a term starting on or after 1 January 2025 were also brought into VAT, and even fees pre-paid before 29 July 2024 could be caught depending on how a school's pre-payment scheme was structured. Separately, private schools that are charities lost the 80% business rates relief on their premises from April 2025, a second cost pressure layered on top of VAT.

For day-to-day budgeting, the practical effect is that whatever percentage of fees a family pays - full fees or a bursary-reduced balance - now includes VAT unless a school has chosen to absorb some of the cost by lowering its underlying (pre-VAT) fees. As the next section shows, a majority of schools did exactly that in January 2025, which is one reason the VAT increase parents actually saw on their bills averaged well below the full 20%.

Are Bursaries Protected From the VAT Rise? What the Government Actually Said

This is the question every bursary applicant should ask first, and the honest answer is that bursary funding is not guaranteed or protected by government policy - it is an expectation, not a commitment. The Education Hub's official guidance states plainly that the government is "not expecting these changes to have a significant effect on bursaries across the private school sector in general," but immediately qualifies this by confirming that "how to fund new tax liabilities will be a commercial decision for individual schools." In other words, ministers expect the sector as a whole to keep bursary provision broadly stable, but no school is required to do so, and no funding is ring-fenced to make it happen. One group did receive a specific commitment: the Ministry of Defence and the Foreign, Commonwealth and Development Office confirmed they would increase funding for the Continuity of Education Allowance (CEA) to reflect VAT-driven fee rises, and the 2025 ISC census recorded 1,419 pupils receiving a total of £38 million through this scheme - but that protection is specific to military and diplomatic families, not to means-tested bursaries generally.

What this means practically: a family that received a bursary in 2024-25 should not assume the same percentage, or any award at all, will automatically continue into 2026-27 or 2027-28. Bursaries are reviewed annually at every school we cover in this guide, and a school's overall bursary budget is a decision its governors and bursar revisit each year in light of its own finances - including how much of the VAT cost it has chosen to absorb rather than pass on.

How Much Bursary Funding Is There in 2026? The ISC 2025 Census Numbers

The Independent Schools Council's 2025 census, taken on 16 January 2025 - the first full census after VAT was introduced - is the most authoritative current source on fee assistance. It covers 545,640 pupils at 1,423 ISC member schools, a fall of 2.0% compared with 2024, and among schools that completed the census in both years, a like-for-like fall of 2.4% (13,363 pupils). New pupils joining in the current academic year totalled 102,544, down 5.2% on 2024, and three of the main intake years - Reception, Year 3 and Year 7 - each recorded falls of more than 5%.

Against that backdrop of falling rolls, total fee assistance actually grew. ISC schools and other funders provided over £1.5 billion in fee assistance in 2025, up 11.4% on 2024, of which £1.1 billion - 73% of the total - came directly from the schools themselves, an increase of 3.9% year on year. Of that school-funded assistance, £547 million was means-tested (nearly half, 49%, of all school-funded help), and 36,918 pupils held a means-tested bursary. The average means-tested bursary was worth £13,850 a year, up 7.3% on 2024. Over half of means-tested bursary recipients (51%) had more than half of their fees remitted, and over a third had more than 75% remitted; 7,245 pupils paid no fees at all through a bursary alone, rising to 9,254 pupils once combined bursary-and-scholarship free places are included. Across all forms of help - bursaries, scholarships, Early Years Funding, local authority support and military schemes - 183,487 pupils, or 34.5% of all ISC pupils, received some form of fee assistance in 2025.

ISC chief executive Julie Robinson has cautioned that "it is unclear whether the past few years of rises in fee assistance will be sustainable in the future," given that pupil numbers are falling and schools have less fee income overall to draw on. That is worth reading alongside the government's "not expecting a significant effect" language above: both point in the same direction - fee assistance has, so far, held up and even grown through the first year of VAT, but neither the ISC nor the government treats that as a guarantee for future years.

Who Qualifies? Bursary Income Thresholds at Five Named Independent Schools

Most schools do not publish a hard income cut-off, preferring to assess "each case individually." A handful do publish clear figures, and we verified each one directly against the school's own admissions or bursary page in August 2026 rather than relying on third-party summaries, several of which are out of date. St Paul's Girls' School is the clearest example: some secondary sources still quote an older £140,000 figure, but the school's own current bursaries page states a £150,000 gross household income threshold.

Two patterns stand out. First, the range is wide: a family on £60,000 gross income would be over Manchester Grammar School's threshold entirely but comfortably inside the qualifying range at St Paul's School, St Paul's Girls' School or Latymer Upper School - school choice, not just income, determines whether you are even in the conversation. Second, every school we verified assesses net assets and other income alongside gross salary, so two families on identical salaries can receive very different awards depending on mortgage equity, savings, or a second property. None of the five schools above treats its published figure as an automatic cut-off; all describe it as a general guide to whether an application is worth making, with the final award set by a full financial assessment.

How Bursary Assessments Actually Work: Income, Assets and the Application Process

Behind every published threshold sits a broadly similar assessment process, though the detail varies school to school. Most schools ask for a written statement of financial circumstances - income, outgoings, property equity, savings, investments and any other sources of support - verified with payslips, tax returns or benefit statements. Exeter School and Latymer Upper School both use a home visit as part of the assessment, carried out by a bursar or an external assessor, partly to understand circumstances that a form cannot capture (a job loss, a health condition, a change in childcare needs). St Paul's School applies a specific allowance of £15,000 per dependent child (other than the applicant) against assessable income, which matters for larger families sitting close to a threshold. Awards are not one-off: schools reassess income annually, and Manchester Grammar School states explicitly that "family incomes are reviewed annually and the value of the bursary is adjusted accordingly" - a bursary can go up as well as down.

Asset limits catch some families that a pure income test would miss. St Paul's School sets a net asset ceiling of £1.6 million; Exeter School treats net assets above £300,000 as making support "unlikely"; Latymer Upper School flags a home worth more than £1.5 million, a second or holiday property, and recent expenditure on home improvements as factors that typically rule an application out even where income looks eligible on paper. In practice this means a family with a modest salary but a large amount of housing equity, or a family running a business with fluctuating declared income, should expect closer scrutiny than the headline income figure alone would suggest.

Has the VAT Change Increased Demand for Bursaries?

The evidence points to real pressure on family budgets, but not a simple story of schools passing on the full 20% and bursary demand exploding as a result. When the ISC surveyed fee changes between September 2024 (before VAT) and January 2025 (when VAT was first applied), the average underlying fee reduction schools made was 5.0%, which the ISC calculates means schools passed on, in effect, an average of 14.0% VAT to parents rather than the full 20%. A total of 584 schools (67.7%) cut their underlying day fees in January 2025 specifically to soften the VAT impact, with most cutting by up to 10%. Even so, the year-on-year fee change excluding VAT was still a positive 1.8% between January 2024 and January 2025, on top of whatever VAT was added.

The pupil-number data suggests that some families left or did not join the sector rather than seek a bursary: total ISC pupil numbers fell 2.0% and new admissions fell 5.2%, with Reception, Year 3 and Year 7 - the three peak entry points - each down over 5%. At the same time, fee assistance grew 11.4% and the average bursary grew 7.3%, which is consistent with schools trying to retain existing bursary families and support more new ones even as the total pool of fee-paying parents shrank. Both things can be true at once: schools increased support for those who applied, while VAT priced some other families out of applying at all. Average day school fees excluding VAT were £6,152 per term in the 2025 census, with boarding fees averaging £14,365 per term - the base on which a bursary percentage, and VAT, are calculated.

What Does a Bursary Cover - and What Doesn't It Cover?

A bursary is not the same as a scholarship, and the two are frequently confused. A scholarship is awarded for academic, music, art or sporting merit and is typically worth a modest percentage of fees (often well under 50%, and sometimes as little as 2-10%) regardless of family income; a bursary is means-tested and can run from a small percentage up to 100% of fees, based purely on financial need. Some schools, including St Paul's School, allow a scholarship and a bursary to be held together, with the bursary providing the larger financial benefit in most cases. At St Paul's School, a Founder's Award (bursary) also extends to related costs at the same percentage as the fee award - uniform and sports kit, academic and sports trips, school transport, music lessons and instrument loans, and Duke of Edinburgh participation - which matters because those "extra" costs are also subject to VAT where the school charges VAT on them.

What a bursary does not typically cover: a reduced deposit is usually still payable on accepting a place (St Paul's School charges £200 instead of the standard amount, waived entirely for 100% awards), and registration or assessment fees are sometimes separate (Latymer Upper School charges £220 to register for 11+ entry (£300 for 16+ entry), though this can be waived on request; St Paul's School charges £75-£240 depending on entry point). Families should also budget for the balance of fees they remain liable for - a 70% bursary still leaves 30% of a VAT-inclusive fee to pay every term, which for a London day school charging upwards of £7,000 per term is a meaningful ongoing commitment even after a substantial award.

When to Apply: Bursary Deadlines and Timelines for 2026-27 and 2027-28 Entry

Deadlines are set independently by each school and are typically earlier than most parents expect, often tied to the main registration deadline rather than a separate later date. Exeter School's published deadline for bursary applications for 2026/27 entry was Friday 9 January 2026. Most schools ask families to indicate an interest in a bursary at the point of registration - Manchester Grammar School and Latymer Upper School both require this - after which a financial assessment form, and in some cases a home visit, follows before an offer is confirmed alongside the academic outcome. Because bursary budgets are fixed and reviewed annually rather than centrally guaranteed (see above), applying as early as a school allows, and well before any published deadline, gives a family the best chance of being assessed while funding is still available for that intake year. If you are weighing whether the overall cost of independent education, even with a bursary, makes sense against the state alternative, our cost-benefit guide to private tuition and independent schooling works through that comparison in more detail.

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