VAT on Private School Fees: A Potential Challenge for Divorced and Separated Parents in Financial Agreements

Starting January 1, 2025, private schools will be required to apply a 20% VAT on all educational and boarding fees. This tax also affects any payments made on or after July 29, 2024, for terms beginning in 2025 or later.

While this change does not mandate a 20% fee increase, as the Government emphasises that each school will make its own “commercial decision” on managing these costs, it is anticipated that parents will face a 15-20% rise in expenses.

This may impose a substantial financial burden, especially for families dealing with divorce, separation, or co-parenting arrangements—challenges that could be intensified by the timing of the change occurring mid-school year.

Navigating Rising Education Costs: VAT on School Fees May Require careful negotiation of Divorce and Maintenance Agreements

For divorced or separated parents, the cost of education is often a key factor in financial settlements and child maintenance agreements. The introduction of VAT on private school fees could lead to disputes over who should bear the additional costs, especially where financial arrangements were settled before the potential VAT increase became a factor.

In cases where there is a dispute about the affordability of school fees, the court will first focus on making sure that essential housing and income requirements are fully met. Only if there is sufficient financial capacity after addressing these primary needs will the court consider setting aside funds for school fees. This might involve an order directing that school fees be paid from income or designating a portion of capital specifically for this purpose. It’s crucial early on to evaluate both the long-term affordability of school fees and the priority each parent places on continuing private schooling for the children.

For clients going through divorce proceedings or revisiting maintenance agreements, it’s important to consider how potential changes to private school fees might impact ongoing and future obligations.  In some circumstances, this may require a change of school for the child/children, a decision which preferably should be discussed and agreed.   Legal advice may be required to adjust court orders or financial settlements accordingly.

Managing Increased School Fees in Co-Parenting

Co-parenting arrangements often involve careful negotiation regarding key decisions about a child’s upbringing, including their education. For parents who are jointly responsible for paying school fees, the introduction of VAT could introduce significant tension in deciding whether private school remains an affordable option.

In cases where one parent feels they cannot shoulder the increased financial burden, disputes may arise over whether to continue private schooling or transition the child to the state system. This could add strain to an already delicate co-parenting relationship, making it crucial for both parents to engage in open dialogue and seek legal advice on how to manage the additional costs.

How We Can Help

At Clifton Ingram, we understand that increased private school fees can create financial strain and uncertainty for families. Whether you're concerned about the impact on your financial settlement, co-parenting arrangements, or general family finances, we are here to help you navigate these challenges.  In some cases, swift action may be required to vary an existing Order containing provision for the payment of school fees.

Our family law team is experienced in handling complex financial matters related to education, divorce, and child maintenance. We can assist in reviewing existing financial agreements, advising on the potential need for renegotiation, and helping you plan for the future in light of these changes.

If you would like to discuss how this increase in school fees may affect your family, please don’t hesitate to contact us for a confidential consultation.

Speak to one of our team today by calling 0118 978 0099 or using our contact form and we will respond quickly.

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