Should You Pay Private School Fees Through Your Company?
What creative business owners need to know about school fees and tax traps
Private school fees are one of the biggest financial commitments a family can make. And if you’re running a creative agency or small business, it’s natural to wonder:
“Can I put my children’s school fees through the company?”
After all, it feels like a business is meant to give you more control. But in this case, the answer isn’t just “no” — it’s “not unless you like paying extra tax.”
Here’s why, and what to do instead.
Why the company route seems tempting (but isn’t)
When you’re running a business, everything starts to revolve around cashflow. So when a £15k or £20k annual school fee lands on your personal desk, it’s tempting to think:
“Can’t the business just cover this? I’m the owner — it’s all the same pot.”
But HMRC sees a sharp line between what’s for the business and what’s personal benefit.
School fees are firmly personal — and treating them as a business expense can trigger serious tax consequences.
What happens if your company pays school fees directly
If your limited company pays school fees for your child (or even an employee’s child), HMRC treats that payment as a benefit in kind.
Here’s what that means in practice:
You pay income tax on the value of the school fees, just like extra salary
Your company pays 15% employer NICs on the same amount
The company cannot deduct the cost against its Corporation Tax bill
You may have to submit a P11D and deal with more reporting
So if you pay £20,000 in fees this year through the company, expect an additional £3,000 in NICs — plus personal tax at up to 45%. You could easily end up paying over £10,000 in tax just to cover the £20k.
That’s not smart structuring — that’s just giving HMRC a bonus.
Why this hits creative businesses harder
As a creative agency owner, your margins are already tight — and you're probably not running with a huge finance team flagging every tax implication.
You might also be running a personal brand or boutique studio where business and life often blur. That makes it even more important to draw the line clearly between company money and personal expenses.
School fees aren’t a reward for your team. They’re not marketing. They’re not client entertainment.
They’re a personal lifestyle cost. So if you let them creep into your business accounts, you’re setting off alarm bells — and opening yourself up to avoidable tax.
So what should you do instead?
There are better ways to fund education — ways that still use your business, but stay on the right side of the rules.
1. Pay yourself more (via salary or dividend)
The simplest approach is to draw additional funds from the business and pay the fees personally.
You still control the flow of money
You avoid employer NICs on a benefit
You keep the company’s books clean
This route gives you the flexibility to use the dividend allowance and timing strategies to reduce the tax hit.
2. Use your spouse’s allowance (if they’re active in the business)
If your partner is involved in the company, you might be able to pay them a salary — and have them cover the fees.
This works best when:
They genuinely contribute to the business
The salary is fair and commercially justifiable
3. Plan long-term with an investment company or trust
Some creative founders are starting to separate personal wealth from trading businesses using:
Family Investment Companies (FICs)
Discretionary trusts
These are long-term planning tools that can fund education from investments, not trading cash — but they require upfront setup and advice.
The bottom line: Keep your business clean
The business should fund your life — that’s the whole point.
But it should do it the right way.
Treating school fees as a business expense might feel efficient — but it’s not. You end up paying more, not less. Worse, you expose your business to scrutiny and complicate your accounts.
The smart play is to:
Take the money properly
Use every legitimate tax relief available
Keep business spending business-focused
Because your creative energy should go into your work — not explaining school invoices to your accountant.
Need help working out the most tax-efficient strategy for your family?
At Pisces, we work with creative business owners to align their personal goals with smart financial structures.
Book a call today and let’s make sure your business is serving your life — not the other way around.
