Lawyers say divorcing couples are arguing over who will pay VAT increase on private school fees

A VAT increase on private school fees from January has become a new battleground for divorcing couples, lawyers say.

The rise in fees – which typically range from £6,000 to £13,000 per semester – is affecting negotiations on ‘tuition fees orders’, with some existing orders now potentially unavailable, they explain.

“The issue has reached a crisis point as parents now have to decide whether to notify their current schools or register for next September,” says Vanessa Friend, a divorce lawyer at Hodge Jones & Allen.

“Reaching an agreement can be extremely difficult in the event of a separation, and this time-sensitive, high-price issue places an additional burden on many of our clients.”

A friend says that removing a child from school due to family separation is not something parents can take lightly, and this financial and emotional dilemma often makes negotiations more tense.

Sarah Jane Boon, partner at Charles Russell Speechlys, says: “A court order ordering a child to pay their school fees will almost certainly not specify the amount of the school fees or that the payment is VAT-free.

“So the parent against whom the judgment is made must pay the fees plus VAT unless they can persuade the court to vary or dismiss the judgment.”

Below, lawyers explain how school fee orders work, what options are available to divorcing parents when the cost of private tuition is skyrocketing, and what can be done if an order has already been issued.

How do divorcing couples react to tuition increases?

“Over the last 12 months we have already seen an increase in clients coming to us to discuss private school fees as a result of the cost of living crisis – the upcoming VAT rise has only made this worse,” says Helen Marriott, legal partner at Brabners.

“If the payment of school fees has been agreed as part of a court order, the increase in VAT is likely to fall on the parent who already bears the cost of school fees.”

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

He advises parents to communicate and plan ahead, but notes: “School fees can be a significant expense, so people usually know whether they can afford them or not.”

Vanessa Friend says keeping children in private school is often high on the list of non-negotiables when couples divorce.

But a significant increase in tuition has led to an increase in the number of people struggling over whether they can afford private school and who should cover the costs, he says.

Tuition orders specifying that one or both parties will pay are not uncommon, but the additional VAT burden makes agreeing the obligation more complex and time-consuming, explains Friend.

“The significant change in costs means that some couples are unable to provide their child with the education of their choice,” he adds.

What options are open to couples who have children in private schools?

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

“Some people are willing to prioritize school fees – others are not. 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 contract unless they are confident that they will be able to honor these commitments over the life of the contract.”

Reviews the potential options couples face.

– Decide what needs you are willing to compromise, e.g. standard of accommodation.

– Sell the family home, including downsizing further than previously planned, to free up equity.

– Dip into savings or set aside savings and investments.

– Discuss this issue during mediation and take a holistic approach to the children’s education and other child welfare issues.

– Set aside an amount already available to cover all future school costs, rather than relying on future earnings – through a fee fund given to a financially dependent party or a joint account providing control and oversight to both parties.

-Move to a good public school or junior high school district, although housing costs usually wipe out some of the savings.

– Consider whether there is income protection that could cover tuition costs in the event of incapacity.

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

If a parent is struggling to pay school fees, it may be tempting to simply stop paying, says Helen Marriott of Brabners.

However, it warns: “Violations of a court order may result in arrears and enforcement action.

“At worst, it could be considered contempt of court, which is a criminal offence. The school may also be able to bring a civil lawsuit against the recipient for breach of contract.

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

They should start looking for vacancies in the New Year so that children don’t have to start a new school mid-term.

“If parents cannot agree on a new school, it may be necessary to apply to court. If parents can collectively afford the fees, a new, non-judicial payment structure can be agreed to ensure consistency in their children’s education.

He adds: “If parents cannot agree on fees, they can make an application to the court. However, given the current significant delays in legal proceedings, this could take up to 12 months to resolve, so it should only be used as a last resort.

Sarah Jane Boon, partner at Charles Russell Speechlys, says: “An application to vary or dismiss an order will only be successful if the applicant can demonstrate that the fees are no longer affordable by providing up-to-date information on their income and expenses.

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

“You may also want to consider any savings that either parent could put toward tuition.”

Vanessa Friend of Hodge Jones & Allen says you should not rely on a court application to reduce your premium to cover costs that are too expensive.

“The courts do not accept the request lightly. We encourage couples to discuss issues at an early stage and consider alternative forms of dispute resolution, such as mediation. It will probably be cheaper than going to court.