Starting on 1 January 2025, private school fees will be subject to VAT. This additional financial burden for some families will be significant, with fees rising by up to 20%. The Government’s change is forcing many parents to re-evaluate their family’s finances and make decisions about their child’s future education. For divorced and separated parents, the end of the school fees tax exemption will inevitably give rise to disagreements about decisions for their child’s education, including who is responsible for paying the extra cost and whether private education remains viable or if a switch to a state school is necessary.

What’s Happening?

VAT will be charged on the provision of education in independent settings from compulsory school age – meaning from reception through to sixth form. VAT will also apply to extracurricular private school activities with an educational focus, such as drama and sports clubs (though not to wraparound care).

If a child with special educational needs attends a specialist independent school named in their Education, Health and Care Plan (EHCP), and the Local Authority funds the school fees, the VAT charged can be recovered by the Local Authority, meaning there is no impact on parents. However, if the parents are paying the costs of a specialist independent school, they will remain responsible for paying both the school fees and the additional VAT. This is likely to place additional pressure on parents of children with special educational needs and disabilities who attend independent school settings.

What’s the impact on separated parents?

While parents are used to annual fee increases, this nationwide VAT change is significant, and the ripple effects are already being felt in family law.

Most parents share Parental Responsibility, which gives each parent the legal right to make decisions about their child’s education. Disagreements over how this Parental Responsibility should be exercised—especially regarding school choices and finances —are already leading to disputes between parents, as some cannot agree on what is best for their child.

Disputes arise over who is responsible for covering the additional costs of school fees. In cases where a court order assigns one parent the responsibility for school fees, this parent may still be required to pay the increased fees, even if VAT was not specified in the original order. If the parent can no longer afford these fees, they may seek to have the order varied.

Both parents may agree that the increased private school fees are now unaffordable but disagree on which state school is best for their child. For some separated parents, a change in the child’s schooling may also prompt a review of the arrangements by which the child spends time with each parent, leading to a dispute over with whom the child should live.

While shared care arrangements between separated parents may have worked for the location of a private school, a change to a local state school may mean that a shared care arrangement is no longer workable, leading to a change in living arrangements for the child and, in some cases, a variation of a Child Arrangements Order.

Separated parents who had agreed to send their child to boarding school may face difficulties if this becomes unaffordable. In such cases, they will need to decide where the child will spend their term time, which could lead to further parental disputes about the child’s living arrangements.

What are the Challenges?

From a legal perspective, there are several challenges in resolving a dispute about a child’s education that will require careful navigation.

In law, there is a legal mechanism for the court to decide issues about a child’s education. Under the Children Act 1989, if parents disagree on how to exercise their Parental Responsibility regarding their child’s education, the court can intervene. A judge can make a Specific Issue Order to decide where and how the child should be educated and will make this decision with the child’s welfare as the court’s paramount consideration. For example, a court can decide whether a child should be electively home-educated or attend a formal school setting, whether a child should attend an independent school or a state school, or whether a faith-based or secular school is in a child’s best interests.

The challenge is that timing can be a real issue – seeking a court-based resolution and aligning the timetable with the state school admissions process can prove difficult. Withdrawing a child from an independent school also needs to be done at the requisite time in accordance with the terms and conditions of the business, and ideally with an alternative school already lined up.

Court delays

There are huge backlogs in the Family Courts, exacerbated by the COVID-19 pandemic. For parents who disagree and seek a court decision, delays in the court system mean cases can take over a year to resolve. During this time, the child may remain in uncertainty while awaiting a decision.

Securing a state school place

Parents must also consider that they cannot ask the court to order a child to attend a specific school unless they have a confirmed school place at the time the judge is making a final decision.

Securing a school place at a parent’s chosen school depends on the school admissions process for the child’s local authority. Timing is a real issue, as aligning the court process with the school admission process can be challenging.

Admissions for state schools are typically at Reception for primary schools and Year 7 for secondary schools. For state primary school applications for a place starting in September 2025, the deadline for applications is 15 January 2025, with National Offer Day on 16 April 2025. For state secondary school Year 7 applications, the deadline was 31 October 2024, for places starting in September 2025, with National Offer Day on 3 March 2025. Typically, securing a school place for a child outside of these entry points means making an In-Year transfer application to the local authority for a school place.

For popular ‘oversubscribed’ schools, if no place is available, parents may need to appeal in order to persuade the school to reconsider and offer a place for their child.

The specific admission criteria will depend on the school, but commonly the criteria used is the distance from the child’s address to the school itself – otherwise known as the ‘catchment area’. If a child divides their time between two parents and two households, most local authorities will consider the primary principal address to be where the child lives most of the time during the school week.

Way forward

To effectively address the challenges posed by the VAT increase on school fees, separated parents must engage in proactive discussions to navigate financial concerns. Seeking legal support through negotiation, mediation, or arbitration can offer an efficient and constructive way to resolve disagreements outside of a court-based resolution. These alternative dispute resolution methods allow parents to reach a quicker, mutually acceptable solution outside of the courtroom and can avoid lengthy delays and emotional stress associated with litigation. If court involvement becomes unavoidable, it requires careful navigation. Seeking legal advice early on can help to identify the best course of action and minimise complications.

How we can help?

If you have a concern about how the new VAT on schooling may impact your family situation if you are separated or divorced, please contact our highly skilled family team for further advice. Call 020 3440 8000 or email family@tvedwards.com. We are here to help.

This article was first published in CEO Today in January 2025.

Disclaimer: The information on the TV Edwards website is for general information only and reflects the position at the date of publication.