VAT on Independent school fees: the impact on divorcing or separating parents

VAT on Independent school fees: the impact on divorcing or separating parents.

Currently, private school fees in the UK are exempt from VAT. However, the Autumn Budget announced yesterday confirms, as expected, that VAT will be brought in on Independent school fees in January 2025. As of last year, there were 28,876 pupils in 71 independent schools in Scotland. This news will impact all families with children in private education and will be an additional financial consideration for those separated or currently navigating that process.

For couples that are already separated and have finalised their financial arrangements, there is likely to be either a Minute of Agreement or a Court Order in place which sets out who is responsible for payment of school fees. While it is usual for school fees to increase yearly, such orders or agreement would have been entered into without this additional cost being factored in and may now leave the paying parent in a position where the increase will be unaffordable.

One option for parents finding themselves in this position is to agree to vary the terms of any court order or agreement reached. If direct agreement cannot be reached between the parents then a Minute to Vary would be required and the paying parent would require to show that there had been a material change in circumstances to justify the change being sought.

For couples that are separating, this additional cost will need to be taken into account in any settlement discussions. Financial pressure on families as they transition from one household to two might already be a concern and so for some households, this change may mean that private education is no longer affordable for their children and state options will need to be considered which might also impact on where they need to live in order to fall into the relevant catchment areas for their preferred schools.

Where separating couples can’t agree how school fees will be funded or whether their children can continue to be privately educated, it is advisable to start discussions as soon as possible.

If you would like further information regarding the topic discussed in this blog, please contact Sarah Feeney.

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.