The Government has confirmed that VAT will be payable on private school fees from January 2025, placing considerable pressure on parents mid-way through the school year. This will be particularly challenging for divorcing couples who are already stretched financially and where decisions about a child’s education and what’s best for a child are not always agreed.
When dealing with the finances on divorce, or assisting an unmarried parent under Schedule 1 of the Children Act, whether a parent is successful in obtaining a school fees order will depend on the judge’s analysis of the available income and capital and the expenses of both parties. A court is highly unlikely to make a school fees order unless it is very clear that there is surplus income and/or capital from which these fees can be easily met.
The potential impact on divorce and financial settlements may affect not only those families where children are already attending private school but also where parents had hoped to send their children to private school, and where this was being factored into the negotiations, and in cases where there may be a disagreement as to whether a child should attend private or state school. For separating parents who can’t agree about whether state or private school is the best option, the parent favouring the state system may now have a stronger case. In cases where parents disagree about which school a child should attend, the family court can make a Specific Issue Order.
For families who are considering factoring future school fees into any divorce settlement it’s important to take into account an average annual percentage increase in addition to VAT. Most Private school fees increase annually by between 3% and 8%.
In the event private school fees become unaffordable, separating parents may choose to rethink their preferred location for housing, so that they can be nearer to preferred state schools. This may impact upon the capital required to re-house in a chosen area which is another element that may need to be renegotiated.
For separated couples with existing court orders detailing who is responsible for school fees, the increased costs may lead to difficulties meeting the payments. If a school fees order has been made and the paying parent can’t afford the higher costs this may lead to the order being breached and the other parent having to apply to court. The parent making this application must be mindful that increased school fees may amount to a change in financial circumstances which necessitate a school fees order being varied.
In the majority of cases where a change is necessary it is likely to be something that parents can agree between themselves. If a change to an existing order is required and is agreed, the varied order can be sent to the court for the judge to consider without a court hearing being necessary.
Where there is disagreement over how to manage the increased school fees or difficulties agreeing the appropriate school, family mediation can help facilitate discussions.
The Family Team at Birketts is able to assist with advice relating to school fees orders, child arrangements or any other family matter.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2024.