Scottish private schools hit parents with 16.2% VAT-linked fee hike - weeks after revealing cost-saving merger

Parents of pupils at two major Scottish private schools have been told fees will rise by 16.2 per cent in January as a result of Labour’s decision to end the sector’s VAT exemption.

The increases at the all-girls Mary Erskine School and all-boys Stewart’s Melville College in Edinburgh, as well as the shared junior school, were announced in an email from principal Anthony Simpson on Monday night.

It follows similar rises at some other high-profile independent schools, with an 18 per cent uplift planned at Edinburgh Academy and a 15.2 per cent rise at St George’s in the Scottish capital.

ESMS

The hike at Mary Erskine and Stewart’s Melville will mean fees for pupils at the senior schools will increase from £16,761 to £19,478.

The announcement was made just a few weeks after it was revealed the two senior schools would be merging to become a single, co-educational school with 2,500 pupils from the start of the 2026/27 academic year.

Parents were told the amalgamation was designed to make the group of schools - known as the Erskine Stewart's Melville Schools (ESMS) - more efficient and to “limit substantial fee rises”.

Private schools across the UK have been announcing the impact of the 20 per cent VAT charge on fees, which comes at a time when many schools are already under significant financial pressure.

In his email, Mr Simpson said: “I want to extend my sincere gratitude for your patience while we worked through the complexities around the addition of VAT on fees, and I now have a more detailed update to share.

“We understand the importance of this information for your financial planning and are fully committed to supporting each family during this period of change. 

“As you know, from January 2025, the UK government will introduce a 20 per cent VAT on school fees for students from Primary 1 through to S6, including any fees paid in advance after July 28, 2024. Nursery and wraparound care will not be impacted. 

“To address these changes, we have collaborated closely with professional advisers, our governors, and the Merchant Company Education Board to ensure we recover as much VAT as possible to mitigate the impact on ESMS families.

“While it’s not possible to offset the total VAT cost entirely, we have been able to reduce the base fee by 3.19 per cent, resulting in an overall increase of 16.2 per cent in January, once VAT is applied to the reduced fee, at 20 per cent.”

Mr Simpson added: “Our priority remains to keep fees as manageable as possible whilst maintaining the quality of education ESMS offers. This includes our plan to stabilise fees in the future through ongoing cost-saving measures that will be realised more fully post-merger.

“We are keenly aware that this mid-year increase is substantial and will impact each family. Every pound of recoverable VAT will be allocated toward reducing fees; nothing will be retained by the school. 

“I fully appreciate that there will be frustration that we have not been able to absorb a higher proportion of VAT. When we announced the fee changes last summer, we did everything we could to keep the fee increase as low as possible.

“As a result, our ability to make further cuts without impacting on the quality of education we are able to offer our students is limited.”

Mary Erskine School | ESMS

ESMS is the largest family of independent schools in Europe.

They operate what is known as “a diamond structure”, with girls and boys educated together in the junior school and then separated for the bulk of secondary before coming back together for the final year.

Their merger will leave just three single-sex schools in Scotland - the all-boys Merchiston Castle and all-girls St George’s in Edinburgh, and St Margaret’s School for Girls in Aberdeen.

The Scotsman has previously revealed how the plans have led to a backlash from some parents and pupils.