Paying the grandkids’ school fees could generate a shock IHT bill

Private school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?

Grandfather and granddaughter playing with building blocks
(Image credit: 10'000 Hours via Getty Images)

The majority of families receive help when paying private school fees – 65% according to think-tank Civitas. Of this group, 30% have received a gift from family or friends, and 13% a loan from loved ones.

It is hardly surprising when you consider the cost. Data from the Independent Schools Council (ISC) shows the average termly fee for a day school was £7,382 in January 2025, up 23% compared to a year ago.

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Katie Williams
Staff Writer

Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.

Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.

Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.

Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.