Funding your child or grandchild’s education may seem expensive at first, but with the right planning, it can be done.
Private school fees in Britain are rising steadily - and not in line with the salaries of those paying them. But this hasn’t stopped parents and grandparents from wanting a prestigious education for their loved ones.
According to the latest census report from the Independent Schools Council (ISC), the typical fee level for day pupils is £4,763 per term, which equates to £14,289 per year1.
And for those funding the education of more than one child, the cost can be extortionate. In London, the average total cost of private education from ages 4/5 to 18, is £184,782 per child – the highest in Britain2.
Where do I begin?
With high figures on the horizon, it makes sense to start planning how you’re going to fund the course of your child or grandchild’s education as early as possible. But before you begin, the important questions to ask are:
- how old is my child/grandchild?
- how much of their education do I want to fund?
- can I pay termly or annually?
Once you’ve scoped out the above, a qualified financial adviser can work with you to create a school fee plan. This can help with:
- funding a loved one’s education tax efficiently;
- making fees more affordable - something that isn’t as easy when fees are taken directly from your income;
- smooth payment for the agreed period of education;
- potentially reducing an inheritance tax bill for grandparents.
What are my options?
There are a number of ways to fund your child or grandchild’s education, and the approach you take will depend on your personal circumstances. Investing your money may be an option if you have between 5-10 years or more before you need it. How you invest, doing it tax-efficiently and – most importantly – making sure your investing to beat inflation, is something a qualified financial adviser can help you with.
You could contribute towards your grandchild’s school fees by making gifts throughout your lifetime, but such gifts need to be made more than seven years before you die in order to escape inheritance tax. You can also give away £3,000 a year tax-free through your annual exemption, which is free from the 7-year rule. Gifting could be an effective way to help reduce your inheritance tax bill, so the benefit is two-fold.
Giving the gift of education not only contributes to a brighter future for your loved ones but allows your money to be put to good use at the right time. Through effective school fee planning, the best outcome can be achieved for you and your child or grandchild, in line with your goals and personal circumstances.
We recommend you seek professional advice prior to taking any course of action.