One goal that many clients ask our Financial Advisers at Four Wealth Management about is saving for their children’s private school or university fees.
After paying for your home, funding private education for your children is likely to be one of your biggest expenses. Research has shown the average cost of paying for private school is £17,232 per year or £275,000 per child from Year 1 to Year 13*. This is a significant cost that should be planned for in advance, here are some ways to potentially save tax when paying school fees.
Grandparents can contribute to school fees
Grandparents can contribute towards children’s school fees. This has the added benefit of reducing the value of their estate over time which will reduce any Inheritance Tax liability.
Using a pension to pay for private school fees
Some parents use the 25% tax-free lump sum from their private pension pot to pay for school fees. Currently private pensions can be accessed from the age of 55 which may not be suitable for all parents as it may be too late.
Save money by paying fees upfront
Some private schools will give you the option to pay a lump sum in advance to cover tuition funding which will protect you from possible inflation rises in the future.
Start planning for your children’s future today
The sooner you begin to put money aside for your children’s future, the more likely you will be to achieve your financial goals of funding private education for them. Many parents open a savings account for their children when they are born.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
*This is money, ‘Cost of sending a child through private school hits £275,000’, 2018