I"m going to take a bit of a different approach.
Let's start with the idea that you probably wouldn't have posted if you didn't feel at least a bit uncomfortable about the situation.
My sense is you discomfort is based on your feeling that what you are teaching him isn't worth what he is offering. Now the response from others is that he choose to offer that amount to you. BUT, his offer is based on imperfect information in that he doesn't know the other, less expensive options he has to learn magic.
When I first started magic, I purchased all of the kids magic store props... because I thought that is all there was. Then, I got Mark Wilson's book and it wasn't long before I discovered the vast knowledge that is really available about magic. From an economics perspective, markets work to determine a price when both parties have all the relevant information. Your friend doesn't have the information of what other options are for learning magic. That is, 4 hours of lessons would cost the same as eight DVDs or four really good magic books.
My question is how do you think your friend would feel when he figures out the other ways he could have spent his money to learn magic? Let me add to that the idea that seeing the magic implies a method that is much more exciting than the actual method. That is, being able to name the card they pick five times in a row is more impressive than showing them a cross-cut force. We've all spent $30 on a DVD/Video for an effect that looked amazing and then banged our heads on the table when learned the method.
My suggestion would be to charge a lower fee - 25 pounds but have him put the rest of what he would have spent toward props (decks, invisible deck) and books (Card College - Volume 1 and then Volume 2). Ask yourself how you would want someone else to act if you were in his shoes.