The average fee for a day pupil is now £3,023 per term, while the equivalent boarding fee is £7,353. Staff costs account for around two thirds of the total bill however non-staff costs are rising rapidly. With energy, food and insurance costs not expected to fall in the near future, the Independent Schools Council does not anticipate any let up in school fees inflation anytime soon.

It said: "In the past few years many of the non-staff costs that make up the remaining third, such as utilities bills and insurance, have increased substantially. Energy prices, especially, have increased by up to 30%. School fees, therefore, are rising for the same reasons that costs for other services are rising."

What this means is that parents educating, or planning to educate, their children privately need to give careful consideration as to how and when they will meet the cost.

Stephen Jackson, senior client partner at Coutts is not a fan of specialist school fees plans, which he says are often expensive and inflexible. He said: "There is not any one magic solution to school fees and a lot of the specific school fees planning vehicles which have been pushed over the years are either no longer relevant or are no longer providing any specific tax benefits.

"Our view when dealing with school fees is really more an exercise in making finances work as effectively as they can. It is broadly speaking a cash flow exercise and we would look to establish exactly what quantum fees are going to be and exactly when they are payable.

"Beyond that we would look at a suitable investment approach in terms of asset classes but probably most importantly we would look to make returns as tax efficient as possible: So things like ISAs and capital gains tax and offshore insurance bonds which allow draw down of 5% a year tax free and can later be assigned over to children to pay for university."

Multi-child and upfront discounts

Parents with more than one child should check what discount is on offer. Around 50% of private schools offer a discount for a second child, while at the remaining 50% of schools the discount (usually between 10-20%) does not kick in until a third child is enrolled.

The discounts for paying fees in advance can be substantial, up to 35% at some schools. Jackson believes that utilising the option to pay in advance, even for parents who have no concerns about meeting fees in the future, can make financial sense as well as provide peace of mind in an increasingly volatile economy.

He explains: "Psychologically people like the idea of tackling the issue, and then putting it to one side knowing that it is broadly dealt with. There is a move afoot to go down the paying in advance route."

Parents can pay years in advance of their child actually starting at their chosen school. However those considering paying up front do need to watch out for clauses in contracts which say that should inflation rise above a certain percentage an additional sum will be due.

Grandparents help out

Trusts have traditionally been used by grandparents, in particular, to fund school fees. However the recent retrospective changes in the tax rules governing trusts has made this option less appealing to some, and grandparents should note that they have non-trust options open to them as well.

These non-trust options come with the added benefit of potentially reducing their inheritance tax bill. Grandparents can utilise their annual gift allowances, or commit to making regular gifts out of income. HMRC has strict rules around "gifts out of income" not least that there has to be an intention that they will be regular and that no asset has been sold to fund the gift, so it is vital that those choosing this route get appropriate advice to ensure they cross the T's and dot the I's on the paperwork.

Borrowing

While far from common, Jackson says that some parents, those who have left it to the last minute or find their cash flow temporarily reduced, do on occasion need to borrow to pay school fees.

"Clearly our clients generally have a reasonably sizable capital base so they would certainly be more prepared to think about the possibilities of borrowing against their capital base to fund school fees," said Jackson. " Now borrowing is obviously more difficult as a result of the collapse in the credit market but certainly it is a fall back position that are clients are very well aware of and may well look to utilise."

By Lindsey Rogerson