Spreading The Costs
Spreading the Costs
There are a number of schemes available that are designed to help Parents with the payment of school fees. The purpose of these plans is to improve cash flow and hence make school fees more affordable.
This involves spreading an element of the school fees over a longer period of time. For example, a Parent may be able to comfortably afford 70% of the school fees from income; however the additional amount may prove to be a strain on finances. In this instance, it may be possible to take out a plan to spread the school fees for the balance of 30% over say a 10, 15 or 20 year period.
Lump Sum Investment
Should you be in the position of having a lump sum that you can allocate to meet the cost of future school fees, there are a range of plans available to you.
Early investment of capital can at best avoid the need to use income for providing for school fees in later years, or at worst go a significant way towards reducing reliance on income. With all investment options these funds are only "earmarked" for school fees and it is at the investor's discretion how funds are used.
In all instances, we embrace fully the need for tax efficiency and flexibility of approach when tailoring individual arrangements. Portfolios and recommendations are specifically constructed to take into account clients' attitude to investment risk.
Regular savings for school fees can help pay for their future costs and should ideally be started as soon as possible. It is wise to commence school fees planning before your children are born. The longer that you save, the less the impact there will be on income when school fees fall due. There are many plans available that can be tailored to individual needs and requirements. This leaves individuals with flexibility to use funds at their discretion.
It is important to ensure that the payment of your children's school fees can be continued in the event of a change in your personal circumstances due to serious illness, injury or death and we will discuss appropriate payment protection plans with you.
Trust planning can be useful for Grandparents who wish to make provisions for school fees and achieve Inheritance Tax benefits at the same time. Trusts offer the benefit of transferring the tax liability on future income and capital gains to the children to utilise their personal annual allowances. Chargeable gains on life policies may also be re-assigned which could avoid a higher rate tax charge. It is important to take advice on the correct trust arrangements for the investments held.
Advice to Parents will need to take account of the Parental settlement rules governing the taxation of gifts to children.
As with all aspects of your financial plan we will discuss the features, advantages benefits and risks associated with each topic covered in the Education Fees planning section
Trust planning is not regulated by the Financial Conduct Authority.