VAT on private school fees: what divorcing parents need to consider 

A contentious issue for many parents is what school their child attends and it is unsurprising that upon divorce this can be one of the key issues. For parents with children at private school the issue of whether school fees should continue to be paid and, if so, by who is often a hotly contested issue, especially given the recent increase in school fees now VAT at 20% is payable from 1 January 2025. 

Often parents primary concern is ensuring stability for their child during the separation, and remaining at the same school is advantageous. The difficulty is you are trying to create two households now and the financial pressure on the family often increases. 

What did the budget say? 

Rachel Reeves confirmed in the budget on 30 October 2024 “the government will introduce 20% VAT on education and boarding services provided for a charge by private schools from 1 January 2025.” As a result, school fees will be even more expensive and disputes regarding the affordability of them likely to be on the rise. 

How should I approach the payment of private school fees with my ex

If possible, it is always preferable for separated couples to agree a financial settlement themselves, either through negotiation (directly or with the assistance of solicitors) and/or mediation. This can be quicker and cheaper than going to court. If your child (or children) are old enough, you may wish to consider child-inclusive mediation. This would provide the children with the opportunity to attend mediation to express their own views on their schooling, and how any changes, either to fee- or nonfee-paying education, might affect them. Whilst their comments and views would not be binding on the parents following those discussions, it can be a powerful indicator to parents as to their children’s wishes and feelings in the context of the matter as a whole, which can sometimes crack the case one way or another.

If you are unable to reach an agreement you may wish to explore other out of court options, such as arbitration. Failing this the court has the power to make orders in respect of school fees. 

Can school fees be considered in a divorce financial settlement? 

Continuity in schooling is important for children, especially if they are in key exam years, and a court is likely to accept that. However, they are considered in the realm of the overall financial landscape and if they cannot be afforded the court may not grant a school fees order. 

The courts will consider all the factors under section 25 of the Matrimonial Causes Act 1973 when deciding the outcome in a financial remedy application. This includes the resource available to both parties (including capital and income) and the needs of each party, including any dependent children. Each case will considered on its own facts and whether or not private school fees can be considered a “need” will be considered in the realm of all the circumstances of your case. If there are sufficient financial resources available the court will consider how your child is currently or was expected to be educated in making a decision. 

A school fees order can be made as part of the wider financial settlement. A school fees order should cover who pays the school fees, how they will be paid (from capital or income) and how long they should be paid. You should also consider “extras” to school fees including uniform, activities etc. and who should be responsible for paying these.  

"VAT on Private School Fees: Key Considerations for Divorcing Parents"
As divorcing parents navigate financial decisions, understanding the implications of VAT on private school fees is critical. This article explores how these costs may impact co-parenting arrangements, financial settlements, and children's education plans, offering practical guidance for families during challenging transitions.

For parents who already have a final financial order that includes payment of school fees, the imposition of VAT on private school fees could lead to them no longer being affordable. Time will tell if disputes over payment of private school fees will end up before the court, both in circumstances where parents are trying to reach an agreement on divorce now and also where a final order has already been made. 

If you require advice on paying school fees following a divorce, please do not hesitate to contact us.

Posted in General, LawyersTagged child-inclusive mediation, continuity in education divorce, divorce and private school fees, divorce mediation school fees, education costs divorce disputes, financial settlement child education, impact of VAT on education costs, Independent Schools Council legal action, paying school fees after divorce, private school affordability divorce, private school fees 20% VAT, private school fees arbitration, Rachel Reeves budget private schools, school fees court orders, school fees in financial settlement UK, UK divorce financial agreements, VAT impact on family budgets, VAT on private school fees 2025Leave a Comment on VAT on private school fees: what divorcing parents need to consider 

© 2023 by Edwards Family Law