Some schools do a discount if a lump sum is paid ahead, it is supposed to be a better deal than saving the money with low interest rates and having to pay higher rate tax on the interest anyway:
The advance payment is then invested by the private school which, because of its charitable status, is exempt from paying any tax on interest earned from the investment.
One school, Radley College in Oxfordshire, with fees of just over £30,000 a year, estimated one in six of its parents have taken advantage of the offer - with £17 million accruing to the school as a result.
Its website say that “funds paid into the scheme are invested in British Government or other fixed interest stocks which guarantees both interest payments and capital redemption”.
“As the College enjoys charitable status it does not pay tax on the interest received,” it adds, “this can be very beneficial when parents and others are assessed at the higher rate of tax.”