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Private school fees: 20 per cent rise pending when VAT is imposed from January
The rise in VAT on private schools from January has become a new battleground for divorcing couples, lawyers say.
Rising fees, which typically range between £6,000 and £13,000 a term, are affecting negotiations for ‘school fees orders’, while some existing orders are now potentially unaffordable, they explain.
“This issue has reached an urgent turning point as parents must decide now whether to notify their current schools or enroll them for next September,” says Vanessa Friend, a divorce attorney at Hodge Jones & Allen.
“Reaching an agreement can be extremely difficult when we are separated and this urgent issue with a high price tag is adding an additional burden for many of our clients.”
Friend says removing a child from school on top of a family separation is not something parents take lightly, and this financial and emotional dilemma often makes negotiations more complicated.
Sarah Jane Boon, partner at Charles Russell Speechlys, says: ‘A court order requiring payment of a child’s school fees will almost certainly not specify the amount of the fees or that the payment does not include VAT.
“Therefore, the parent against whom the order was made must pay the fees, plus VAT, unless they can persuade the court to vary or set aside the order.”
Below, lawyers explain how school fee orders work, what options are open to divorcing parents facing steep increases in the cost of private education, and what can be done about an order that’s already in place. current.
How does a school enrollment order work?
Vanessa Friend of Hodge Jones & Allen explains the basics of these court orders.
A school fees order is a legally binding court order that a parent, or a person who has assumed the role of a parent, must pay school fees, she says.
Vanessa Friend: Private school is often high on the list of non-negotiables when couples divorce
Payments can be regular payments or lump sums. The order is commonly used to separate parents with children in private schools.
The order usually includes additional costs in the school bill, such as school uniforms, lunches, music lessons or educational trips.
Both parties should be clear about these additional costs before reaching an agreement.
The order directs the payer to place funds in an account at the school before the school term and to settle any additional school bills within a specified time period.
It is important to check the school’s terms and conditions. If both parents sign, it is likely that they will both be jointly and severally responsible for paying the fees. For this reason, the order often says that the payer must reimburse the other parent for any nonpayment.
When deciding whether to make an order on school fees, the court will consider the financial resources of both parties and their ability to pay. This includes considering what your future income and future expenses are likely to be.
How do divorcing couples react to rising school fees?
“Over the last 12 months we have already seen more clients coming to us to discuss private school fees as a result of the cost of living crisis – the upcoming VAT increase has only exacerbated this situation,” says Helen Marriott, partner of the law firm. Brabners company.
“Where payment of school fees has been agreed as part of a court order, the increase in VAT will likely fall on the parent who is already responsible for the fees.”
While it’s a financial decision, it can have a big impact on children, especially older students preparing for exams, Marriott says.
She advises parents to communicate and plan ahead, but notes: “School fees can be a significant cost, so people tend to know whether they can afford them or not.”
Vanessa Friend says keeping children’s education in a private school is often high on the list of non-negotiables when couples divorce.
But the substantial rise in fees has resulted in an increase in the number of people fighting over whether they can afford private school and who should cover the costs, he says.
Helen Marriott: Failure to comply with a court order could lead to arrears and enforcement action
School fees payment orders, which stipulate that one or both parties will pay, are not uncommon, but the additional burden of VAT makes it more complex and time-consuming to agree on a compromise, explains Friend.
“The substantial change in costs is preventing some couples from providing their children with the education of their choice,” he adds.
What options do couples who divorce and have children in private schools have?
Parents need to be realistic and factor in inflation, VAT and extras on the school bill, says Vanessa Friend.
‘Some people are willing to prioritize school fees, others are not. The difficulty arises when the parties cannot agree on where to meet in the middle.
“We strongly advise all couples not to sign a legally binding agreement unless they are confident that they will be able to honor these commitments throughout the term.”
She breaks down the potential options couples face.
– Decide what needs you are willing to compromise on, such as the level of your accommodation.
– Sell the family home, including a larger reduction than previously planned to free up capital.
– Dip into savings or set aside savings and investments.
– Discuss the issue in mediation and take a holistic approach in children’s education and other child care issues.
– Set aside a sum of money already available to cover all future school costs, rather than relying on future earnings, either through a fee fund given to the financially dependent party or a joint account that provides control and supervision to both.
– Move to the catchment area of a good state or primary school, although housing costs tend to negate some of the savings.
– Consider whether there is income protection available that could cover the cost of school fees in the event of an inability to work.
Sarah Jane Boon: A court order mandating payment of school fees will almost certainly not specify the amount or that the payment does not include VAT.
What if you have an order and can’t pay the fees?
If a parent is struggling to pay school fees, it can be tempting to simply stop doing it, says Brabners’ Helen Marriott.
But it warns: ‘If a court order is breached, arrears could accumulate and enforcement action may be taken.
‘At worst, it could be considered contempt of court, which is a criminal offence. The school may also file a civil suit against the beneficiary for breach of contract.’
Marriott says if parents know now that they will not be able to pay the fees following the VAT increase from January, they should inform the school as soon as possible.
They should start looking for available places from New Year, so that children don’t have to start a new school mid-term.
‘If parents cannot agree on a new school, then a court action may be necessary. If parents together can afford the costs, a new payment structure can be agreed, outside of court, to ensure their children’s education remains consistent.’
He adds: ‘When parents cannot agree on fees, they can apply to court. However, with significant delays in current court proceedings, this could take up to 12 months to resolve and should therefore be a last resort.’
Sarah Jane Boon, partner at Charles Russell Speechlys, says: “An application to vary or set aside the order will only be successful if the applicant can demonstrate that the fees are no longer affordable, by providing up-to-date information about their income and expenses.”
‘Even if the other parent has not paid any school fees, they will also need to disclose their financial situation, so that the court can decide whether they must now make a contribution to the increased school fees.
“The savings that any of the parents can allocate to school expenses may also be taken into account.”
Vanessa Friend of Hodge Jones & Allen says an application to the court should not be relied upon to reduce a contribution to unaffordable costs.
‘The courts will not accept the application lightly. We encourage couples to discuss issues at an early stage and consider alternative forms of dispute resolution, such as mediation. This is likely to be less expensive than going to court.’
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