School Fees Planning Solutions

An effective strategy for school fees planning is to plan early as this enables the build up of tax free funds. In practice, however, this may not be possible as when your children arrive, family income may reduce and there is likely to be extra demands put on it. In these circumstances, SFIA can design a plan that spreads the cost beyond the schooling period to make both the fees more affordable and create additional wealth.

School fees planning solutions normally comprise three major elements; these are short term cash flow resolution, tax efficient wealth generation and assurance of continuous education.
 

Cash Flow

Wherever possible, funds are made available from equity in your property as this is the most efficient way to borrow capital.  We can arrange a flexible mortgage that withdraws cash only when it is actually required to cover fees, thus minimising the overall cost.
 

Wealth Generation

Tax relief is not available on school fees directly, but as Independent Advisers we are able to offer our clients many opportunities to reclaim tax.

Investments and deposits can often be arranged so that the capital is invested in assets which do not produce any taxable income, or in assets that produce income which is partially exempt from tax. In this way, it is possible to reduce taxable income considerably and therefore the total tax bill.

Investment strategies can be structured to take greater advantage of the favourable tax position of investments that are mainly subject to capital gains tax rather than income tax.
 

School Fees Pension Plan

Throughout our extensive history SFIA has prided itself in making school fees less taxing for our clients - through the use of educational trusts between 1970 and 1990 and more recently by the development of our School Fees Pension Plan.

For those that qualify, our Pension Plan is often the best option. By extending the time you pay your school fees, you may, frequently without any extra monthly cost, build up a substantially greater pension fund and pay off your fees. The additional tax relief gained can often be more than the original school fees!

You can take a substantial part of your pension as cash at the age of 55 even if you don't want to draw income at that time. You may also continue to build up your pension fund after the withdrawal and take further cash payments.

Not everyone wishes or is permitted to use a traditional pension fund to build up additional assets for retirement. In that case, self invested pensions can be set up.

Your portfolio of assets may include:

• Direct investments in shares from the UK and around the world;
• Government and “blue chip” corporate bonds;
• Insurance company funds, investment trusts and unit trusts;
• Commercial property and Real Estate Investment Trusts (or similar);
• Cash.

Self invested pensions offer investors all the advantages of a standard pension plan with the added flexibility that:

• Contributions can be made when the member requires;
• Investments are fully controllable by the member (within broad guidelines set down by the government);
• Benefits can be taken in a highly flexible way to suit the member.

Self invested pensions put you in the driving seat.

For more details see an illustrated example of a School  Fees Pension Plan in the Case Studies section of our Website.
 

Other Tax Planning Solutions

SFIA have proven strategies to reduce or recover income, capital gains and inheritance tax the proceeds of which can be put into your school fees plan.

Provided you earn sufficient higher rate tax, we are able to fully recover £10,000 of tax paid year on year (up to 3 years prior) or save £10,000 of tax paid this year to invest in an HMRC approved scheme that will return your investment and interest within 6 years.

For higher earners there are investment plans that would be even more beneficial. Contact us for further information.

 

School Fees Planning Solutions Continued