On 30 October 2024, Chancellor Rachel Reeves confirmed that from January 2025, private schools will no longer be exempt from paying VAT. This change will impact all families with children in private school, but for separating or separated parents this additional expense is likely to be of particular concern given that when one household becomes two, many costs will increase and some items of expenditure may become unaffordable.
Notably, the Independent Schools Council (ISC) has already reported that enrolment in private schools has fallen 1.7%, such change being linked to the addition of VAT to school fees.
School fees as a priority?
When parties’ separate and have insufficient income or capital to maintain their previous lifestyle, disagreements can often arise as to whether school fees are a necessary and affordable expense.
It will therefore be important to carefully review any existing contract with your child’s school to establish the extent of your financial obligations.
Whereas one parent may wish to prioritise the continuing private education of their children over their lifestyle, perhaps by foregoing holidays or a second car, another parent may insist on moving their children to a state school so as maintain their previous standard of living.
Albeit that every financial settlement on divorce will be determined by reference to the unique circumstances of the family the court will commonly prioritise housing over private schooling where resources are limited and parents cannot agree.
Given the rising cost of private education, it is therefore going to be increasingly important for parents to make it clear to each other where their priorities lie, and where resources allow, consider creating a “school fees fund” which cannot be used for anything other than educational purposes, whether or not the parties separate.
A prenuptial or post nuptial agreement would also be helpful to record the agreed funding arrangements. For further information please see our page on pre & post-nuptial agreements.
School fees orders
On divorce, it is advisable to obtain a financial order, whether agreed between the parties or in the absence of agreement, imposed by a judge within financial remedy proceedings setting out how the parties’ capital, pension and income is to be redistributed or otherwise applied. The order will then be legally binding and enforceable.
It is common that where the parties have entered into a pre or post nuptial agreement, they are able to achieve an order by consent, saving them considerable emotional and financial cost or acrimonious court proceedings.
Any financial order made on divorce can include a ‘school fees order’, requiring one or both parties to pay or cause to be paid school fees and any extras on the school bill.
A divorced parent who is subject to a school fees order that is no longer affordable to them should raise their concerns immediately with their former spouse to try and agree changes that will prevent them from avoid falling into arrears or placing themselves in contempt of court by failing to comply with their order. As referred to above, this is less likely to become an issue if the parents have set up a school fees fund but for many families this will not be an option.
If an agreed solution cannot be found, an application to the court to dismiss or vary the order may become necessary. On any such application, the court will consider afresh the financial circumstances of both parents and any relevant third parties, such as new partners and grandparents, and make a decision as to whether school fees are still affordable. If this issue is one that you are grappling with, please contact us to speak to a member of our Family team who will be pleased to provide advice and practical guidance.
