A growing number of independent schools have chosen to leave the Teachers’ Pension Scheme (TPS).
Recent reporting, based on a Freedom of Information request, suggests that membership among independent schools fell from 1,066 on 29 July 2024 to 880 by January 2026, a drop of roughly 17%.
That change sits within a wider cost picture. VAT has been added to private school fees from 1 January 2025, with anti-forestalling rules pulling certain advance payments into VAT if they relate to education supplied from that date.
At the same time, several other cost lines have moved in the “wrong direction” for fee-funded education. TPS employer contributions increased from 23.68% to 28.68% from 1 April 2024.Business rates charitable relief eligibility in England changed from 1 April 2025 for many private schools that are charities.
Employer National Insurance changes were also announced, increasing the rate to 15% from 6 April 2025, with a lower secondary threshold.
Below is a guide to what is happening, the drivers behind it, and the steps schools can take to make decisions that stand up to scrutiny.
The FOI-based reporting shows a clear shift: a noticeable share of independent schools have left TPS since policy confirmation on VAT for fees.
It is also important to separate headline drivers from underlying trends. Sector commentary points to a longer-term pattern linked to pension cost pressure, with newer policy changes adding urgency and accelerating decisions.
TPS is a defined benefit scheme with strong member value. That value carries a high employer cost. Why schools are leaving TPS often comes down to this pressure. When budgets tighten, pension cost becomes one of the biggest controllable lines for a school.
Teachers’ Pensions confirms the employer contribution rate at 28.68% from 1 April 2024.
For schools with a large teaching payroll, even a small percentage change drives a large cash impact. Many bursars and governors will run scenarios that show pension cost growth outpacing fee growth over multiple years.
VAT applies to private school education and boarding supplied for a charge from 1 January 2025.
A key operational point: VAT rules also apply to certain payments made from 29 July 2024 that relate to terms starting from January 2025.
This creates three common responses:
Government guidance also flags that some advance fee arrangements may still be within scope, depending on how the prepayment scheme works.
For many charitable private schools in England, charitable business rates relief eligibility changed from 1 April 2025.
Employer NIC changes add further pressure from 6 April 2025.
Even when each measure feels manageable in isolation, the combined effect can make TPS look like the “largest lever” available.
Leaving TPS is not the only route. Schools commonly assess a short list of structural options, then consult staff and unions where needed.
This is simplest from an HR and recruitment perspective. It can be hardest for affordability and enrolment.
Key actions:
VAT policy detail is set out in GOV.UK technical guidance.
Teachers’ Pensions describes “phased withdrawal” for independent schools: existing members remain in TPS, while new teaching staff enter an alternative pension arrangement.
This can reduce future cost growth without forcing immediate change for current staff. It also creates two-tier benefits, which can affect recruitment.
Practical issues to plan for:
This delivers the biggest cost change, plus the biggest employee relations risk.
Schools need to think about:
Schools often face issues when decisions are rushed. These are the areas that regularly create future disputes, rework, or HMRC questions.
At Apex Accountants, we support independent schools through tax change, payroll cost pressure, and pension decision planning.
Our work typically covers:
TPS exits within independent schools are rising, with FOI-based reporting pointing to a drop from 1,066 participating schools on 29 July 2024 to 880 by January 2026.
The driver story is broader than one policy. TPS employer contributions increased to 28.68% from 1 April 2024.VAT on fees took effect from 1 January 2025, with advance payment rules linked to 29 July 2024.Business rates relief rules changed from 1 April 2025 for many charitable private schools in England, and employer NIC changes followed from 6 April 2025.
If your school is reviewing TPS participation, take a structured approach. Build a cost model, document assumptions, plan consultation properly, and validate the VAT treatment of fees and contracts.
If you want support with modelling, VAT compliance, or pension transition planning, contact Apex Accountants for a focused review.
VAT at the standard rate applies to private school education and boarding supplied for a charge from 1 January 2025.
Not reliably. Government guidance explains that certain payments made from 29 July 2024 relating to education supplied from January 2025 can still be subject to VAT.
Teachers’ Pensions states the employer contribution rate is 28.68%, effective from 1 April 2024.
It is an alternative to leaving TPS. Existing members remain in TPS, while new teaching staff join an alternative pension scheme, subject to the rules and consultation expectations.
GOV.UK guidance sets out that from 1 April 2025, private schools that are charities in England no longer qualify for charitable business rates relief.
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