How the forewarned ‘hike’ on private school fees is going to bite – a family law and Private Office perspective

From 1 January 2025, VAT at the standard rate of 20% will be added to private school fees. Depending on which lens it is viewed through, it can be seen as one of the more gloomy forewarnings of the Labour manifesto, or as a fair way of attempting to raise the funding for 6,500 more state school teachers.

Understandably, given the financial impact this will have in the private school sector, many families have been bracing themselves for this news, but given it was a key part of the Labour manifesto and key campaign line, it is not unexpected. That said, the news of this ‘tax hike’ being implemented from 1 January 2025 which is in the middle of the school academic year and indeed before the next tax and financial year, is somewhat more unexpected and does not leave a lot of time for planning.  

The government has taken a neutral response to the date announcement essentially saying that they believe state schools can cope with any children that may now need to enter the state school system and that private schools do not need to pass on the full 20% fee increase to parents – that said, it is something that requires serious consideration and planning both in terms of finances and also from the perspective of the welfare of children. 

When children are well settled and established at a school, a move could be seen as detrimental to them, for health or special educational needs reasons, as well as if they have had a turbulent few years, (for example if parents have separated) and their school and routine has been a comfort and safety net for them. It is likely that many parents would be extremely reluctant to change their child’s school unless absolutely required.

This is also in parallel with the financial considerations and consequences should families find themselves in a situation where fees are no longer affordable, as highlighted in our colleague Sarah Jane Boon’s article Potential parental disputes about school fees should a Labour government add VAT to fees (charlesrussellspeechlys.com). 

Some families may find themselves unable to meet school fees or, more worryingly, potentially breaching a court order if they have been ordered to pay school fees pursuant to an order on the breakdown of a marriage or relationship and cannot afford to continue to do so. Given schooling and choice of school is highly emotive, if an agreement on schooling or agreement to vary an order cannot be reached, then an application would need to be made to court. However, non-court dispute resolution must be considered seriously prior to making any application.

One important point to make is that the family court is hugely overburdened and prioritises the most serious child welfare cases to be dealt with urgently. 1 January 2025 is only (perhaps shockingly!) some 16 weeks away, so it is highly unlikely that the court would have the capacity to deal with an influx of applications, let alone see cases to conclusion within this timeframe. If families require certainty and a quicker outcome, mediation and/or arbitration can be more swift and flexible options when considering this issue.