Divorced couples are fighting over who will pay VAT increase on private school fees, lawyers say

Private school fees: A 20 percent increase is expected when VAT comes into effect from January

Lawyers say the VAT increase applied to private school fees from January has become a new battleground for divorcing couples.

They explain that the 20% increase in fees (usually ranging from £6,000 to £13,000 per term) has impacted negotiations on ‘tuition fees orders’, with some existing orders now potentially unaffordable.

‘This issue has come to an urgent turning point as parents must decide now whether to notify their current school or enroll them next September, says Hodge Jones & Allen divorce attorney Vanessa Friend.

‘Achieving an agreement at the time of separation can be extremely difficult and this time-sensitive issue, with its high price tag, creates an extra burden for many of our clients.’

Pulling a child out of school on top of a family separation is not something parents take lightly, and this financial and emotional dilemma often makes negotiations even more fraught, says the friend.

Sarah Jane Boon, partner at Charles Russell Speechlys, says: ‘A court order requiring the payment of a child’s school fees will almost certainly not specify the amount of the fees or state that the payment is exclusive of VAT.

‘Therefore, the parent against whom the order is made must pay the fees, plus VAT, unless the parent is able to persuade the court to vary or set aside the decision.’

Below, attorneys explain how tuition orders work, what options are open to divorced parents facing significant increases in the cost of private school, and what you can do about an order already in effect.

How does the school fees order work?

Hodge Jones and Allen’s Vanessa Companion explain the basics of these court decisions.

A school fee order is a legally binding court decision that a parent or a person acting in the role of parent must pay school fees. he says.

Vanessa Friend: When couples divorce, private school is often high on the non-negotiable list

Payments can be regular payments or lump sum payments. This ranking is often used in private schools to separate parents from children.

The order usually includes additional costs on the school bill, such as school uniform, lunch, music lessons or educational trips.

Both parties should be clear about these additional costs before reaching an agreement.

The order instructs the payer to deposit funds into an account at the school before the school term and to pay any additional bills from the school within a certain time period.

It is important to check the school’s terms and conditions. If both parents sign, they will likely be both jointly and severally responsible for paying the fees. Therefore, the order often states that the payer must compensate the other parent in the event of any payment failure.

The court will look at both parties’ financial resources and ability to pay when deciding whether to award tuition fees. This includes considering what their future income will be and their future expenses.

How do divorcing couples react to tuition increases?

“Over the past 12 months we have seen more clients coming to us to discuss private school fees as a result of the cost of living crisis – the impending VAT increase has only made this worse,” says law partner Helen Marriott at firm Brabners.

‘When the payment of school fees is ordered as part of a court order, the increase in VAT is likely to fall on the parent who is already responsible for the fees.’

Marriott says that although this is a financial decision, it is one that can have a big impact on children, especially older students preparing for exams.

He advises parents to communicate and plan in advance, but notes: ‘School fees can be a significant cost, so people tend to know whether they can afford them.’

When couples divorce, maintaining private school education for children is often high on the non-negotiable list, says Vanessa Friend.

But he says the significant increase in fees has led to an increase in the number of people fighting over whether they can afford private school and who should pay for it.

Helen Marriott: Breaching a court order can lead to debts piling up and enforcement proceedings being initiated

Friend explains that tuition fee orders stipulating that one or both parties will pay are not uncommon, but the extra VAT burden makes agreeing on the undertaking more complex and time-consuming.

‘The significant variation in costs is causing some couples to price out providing their children with the education of their choice,’ he adds.

What options are available for divorce for couples with children in private schools?

Parents need to be realistic and take inflation, VAT and extras on the school bill into account, says Vanessa Friend.

‘Some people are ready to prioritize school fees, some are not. The difficulty arises when the parties cannot agree on where to meet in the middle.

‘We strongly advise all couples not to enter into a legally binding agreement unless they are sure they can keep these commitments for the entire period.’

It reviews the potential options facing couples.

– Decide which needs they are willing to compromise on, such as housing standards.

– Selling the family home, including further downsizing than previously planned, to free up capital.

– Dive into savings or set aside savings and investments.

– Discuss the issue in mediation and take a holistic approach to children’s education and other child care issues.

-Surround yourself with some money already available to cover all future school expenses, rather than relying on future earnings through a fee fund given to the financially dependent party or a joint account that gives control and oversight to both.

-Move to the catchment area of ​​a good public school or elementary school, although housing costs may negate some of the savings.

– Consider whether income protection is available to cover the cost of school fees in the event of an inability to work.

Sarah Jane Boon: A court order requiring the payment of school fees will almost certainly not state the amount or state that the payment is exclusive of VAT

But what if you have an order and can’t afford the fees?

If a parent is struggling to pay school fees, it can be tempting to hold off, says Brabners’ Helen Marriott.

However, it warns: ‘Breaching a court order may result in debts being accrued and enforcement proceedings being initiated.

‘In the worst-case scenario this could be considered contempt of court, which is a criminal offence. ‘The school may also take civil action against the creditor for breach of contract.’

Marriott says if parents know they won’t be able to afford the fees after January’s VAT increase, they should let the school know as soon as possible.

To ensure that children do not have to start a new school mid-term, they should start looking for suitable places from the New Year.

‘If parents cannot agree on a new school then it may be necessary to go to court. ‘If parents can afford the fees together, a new payment structure can be agreed out of court to ensure their child’s education remains consistent.’

He adds: ‘Parents can appeal to the court if they cannot agree on fees. However, due to significant delays currently experienced in court processes this may take up to 12 months to resolve so this should be a last resort.’

Sarah Jane Boon, partner at Charles Russell Speechlys, says: ‘An application to vary or set aside the decision will only be successful if the applicant can prove that the fees are no longer affordable by leaving an up-to-date description of their income and expenses.

‘Even if the other parent has not paid any of the school fees, they will also need to disclose their financial situation so the court can now decide whether they will contribute to the increased school fees.

‘Any savings either parent may make towards school fees may also be taken into account.’

Friend Vanessa of Hodge Jones & Allen says applying to the court to reduce contribution to unaffordable costs should not be relied upon.

‘The courts will not accept the application easily. We encourage couples to discuss issues at an early stage and consider alternative dispute resolution, such as mediation. This will probably be cheaper than going to court.’