The average annual term fee for a senior day school is now £5,009, which adds up to £15,027 a year, according to the latest annual survey by the Independent Schools Council (ISC). For boarding school, the average fee is now £11,304 per term or £33,912 a year.

There are, however, big regional variations. In London, the average term fee is £5,759, compared with £3,581 in the North West.

Despite rising costs, pupil numbers at private schools are estimated to be at record levels.

There are now 536,109 pupils at 1,364 ISC member schools, up from 529,164 in 2018 – the highest number since records began in 1974.

Financial planning tips

For families determined to give their children an independent education, Jason Hollands, managing director of wealth manager Tilney, says early planning is essential.

“The last thing any parent will want to do is disrupt their child’s education and friendships part way through because they have run out of financial resources,” he says.

His first tip is to discuss your plans with your wider family.

“Grandparents are often pivotal in supporting children through private education. It is natural to want to help their families out, if they are in a position to do so, and such lifetime financial assistance can also be very sensible in helping mitigate a future inheritance tax liability. IHT receipts for the Treasury have, after all, recently hit record levels.”

Hollands says you should then think about your investment strategy, beginning with your timeline.

“Establish at what age the child is expected to start attending a private school,” he says.

“Some parents will choose this at the outset, when the child is aged four, or perhaps prioritise this entry at age 11 or 13.”

Then, taking into account school fee inflation, he says you should be able to work out how much you’ll need to cover the cost of your child’s education and match any investment strategy to this liability profile.

Hollands says: “Higher risk investments such as equity funds can be used to fund costs that are many years away, with cash or less volatile assets used for the earlier years on the nearer horizon.”

Cost saving

There are also other strategies to consider if you’re thinking of taking the private school route.

Some schools, for example, offer discounts or fixed fees if you pay for multiple years upfront. A word of warning though: paying in advance will not protect you from Labour’s pledge to add VAT to private school fees, a move which would hike costs by 20% as VAT is due on services when they are delivered, not when they’re purchased.

“However, paying up front for multiple years might at least help reduce exposure to further fee inflation,” says Hollands.

Another option is to set up a bare trust on behalf of the child. By doing this, grandparents and other family members can gift money to the child, but trustees retain full control over where the assets are invested and drawn down until the child is 18.

The child will be deemed the ultimate owner of the trust, which is useful for tax purposes, as it allows the child’s income tax and capital gains tax allowances and exemptions to be used and these are typically available in full as children very rarely have any other taxable income.

Finally, if your child is academically gifted or strong at sports, music or drama, it may be worth exploring scholarships and bursaries, which can provide discounts of 10%-20%.