Twelve private schools entered administration between January and July, double the six during the same period last year, with four failures in July alone. Risk advisory firm Kroll warned that education-sector administrations could finish the year nearly 50% higher than in 2024. The increase is linked to the introduction of 20% VAT on private school fees from January and the abolition of charitable status and business rate relief from April. Smaller, regional and lower-fee schools face the most pressure. Administrations serve to restructure or salvage lender value and indicate broader financial stress amid rising business costs and higher taxes.
The number of private schools collapsing into administration has doubled in the first half of this year, as the government's VAT changes bite into the sector's finances. Figures released by risk advisory firm Kroll show that 12 private schools went into administration between January and July, compared with six during the same period last year. Four of those failures occurred in July alone, raising fears that closures could accelerate further.
"While there continues to be economic uncertainty, weak business confidence and unwelcome speculation on further taxes, we are not seeing a surge in company insolvencies. Naturally, what is more interesting is the picture within certain sectors. We saw a jump in administrations among education and schools, most likely as a result of the government's VAT increase that took effect at the beginning of the year."
Administrations are a formal insolvency process aimed at restructuring businesses or salvaging value for lenders, and they are often viewed as a bellwether of economic health. Their growing use in the education sector is seen as evidence of financial strain on mid-sized and regional independent schools. The squeeze comes against a broader backdrop of rising business costs. Companies across all sectors are facing higher taxes following a £25 billion rise
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