Potential parental disputes about school fees now VAT is to be added

Parents of children at independent schools will be used to regularly assessing the affordability of school fees against their finances – school fees have increased ahead of inflation for the past 25 years. However, with VAT now to be added to school fees, from January 2025, families will be hit with significantly increased fees in the middle of the current academic year. This change could make private schooling unaffordable for some families and bring about concerns about how easily (and when) a good state alternative could be found.

This possibility may be especially worrying for separated or divorced parents, who are committed to a court-imposed obligation to discharge school fees until their children reach the end of their secondary education. A court order compelling payment of a child’s school fees will almost certainly not specify the amount of the fees (or that payment is exclusive of VAT) so the parent against whom the order was made must pay the fees, with VAT added, unless they can persuade the court to vary or discharge the order. An application to vary or discharge the order will only succeed if the applicant can establish that the fees are no longer affordable, by giving up to date disclosure of their income and outgoings. Even if the other parent has not been paying any of the school fees, they will also need to provide disclosure of their financial position, so that the court can decide if they should now make a contribution to the increased school fees, and consideration may also be given to any savings which either parent could put towards the school fees. However, there are always risks of returning a matter to court, and a parent seeking to absolve themselves of a school fees liability could find themselves facing a cross-application for increased spousal maintenance (with the other party arguing that their ex-spouse could afford to pay them more maintenance, if they were no longer paying school fees).

In anticipation of the Budget, some separated parents had agreed with one another that school fees should be pre-paid (if that could be afforded) in the hope that the fees could be settled without VAT. However, most schools warned parents that VAT may still be payable at a later date (even on pre-paid fees). Other parents made advance arrangements to arbitrate any decision that needs to be made about their children’s schooling (as a date can be placed in an arbitrator’s diary with much more flexibility and much less delay than a court hearing). For those who have not taken such steps, timing will now be a real issue. Family courts are already overwhelmed with current cases, and an application about the affordability of private schooling could take a year to resolve through a court-based process. Meanwhile, some options for the child’s schooling may be “off the table” if applications cannot be made or accepted in time because parents are waiting for the issue to be resolved in court.

Separated parents who are still not able to agree whether their child should move school because of affordability issues would now be highly unlikely to have that issue resolved by the court before January. That may leave some parents defaulting on their court-ordered obligation to pay school fees which, in extreme circumstances, can mean the school does not allow the child to attend. For some separated parents, a change in the child’s schooling may also prompt a review of the arrangements by which the child spends time with each parent because, for example, parents may have picked a private school which is 40 minutes (in different directions) from each parent’s home, and agreed that they would then share the care of the child. However, if the child has to move to a state school then that will be in the area local to only one of the parents, which could mean a journey of circa 1 hour 15 minutes from the one parent’s home (and a 5 minute journey from the other), prompting a possible dispute about whether the arrangements should change so that the child lives with the parent who is local to the school during the school week. Issues will also arise for separated parents who agreed to send their child to boarding school, if this is no longer affordable, as decisions will then need to be made about where the child spends the school term time.

In circumstances where both parents agree that private school fees will now be unaffordable, once VAT is added, then they need to start having discussions now about what state option would be best and that can include a discussion about which address an application for a state school place will be made from (as, if the child’s time is divided equally between their parents’ homes, then the application could be made from either parent’s address, which may mean there are different catchment areas to consider).

The decision to add VAT to school fees from January 2025 is sooner than most parents expected the change to come in and it is particularly unhelpful that it falls in the middle of the academic year. Some parents will have held off making what may now become necessary decisions about a move to a state school, meaning they now face the difficulty of finding a state school place in the middle of a school year, and it will be even more difficult now with significantly increased numbers of places being sought at the same time.