Saving for School Fees

Saving for School Fees

It is always best to arrange your school fee planning well in advance, so if you are saving for school fees you may be uncertain of how many children you may need to plan for. In addition you will be uncertain of what school they are going to attend and when they are likely to commence schooling.

Therefore in order to commence planning you should start by making assumptions both on the number of children you believe you are likely to have and when they are likely to be privately educated. You can obtain an indication of the current cost of any fees by contacting schools that are local to you. The current average for private day school fees is around £13,194 and for full boarding school fees multiply that by 2.3 times.

Depending when they commence private education, the total cost of school fee funding for day school could range between £189,000 from age 11 or as much as £286,000 from age 5.

Given the very significant cost of funding school fees, it is a very good idea to seek out professional advice to ensure that the costs are clearly laid out before you and you receive some input as to how best to prepare yourself for the years ahead.

The majority of school fee funders will be high rate tax payers, to attempt to fund school fees out of after tax income for this type of client is likely to subject the household finances to severe strain.

The financial strain can be eased by allocating a large amount capital at an early stage – how you allocate capital could prove crucial in the years ahead.

Consider also sharing the burden with the grandparents, they may be delighted to assist either with a gift of capital or with regular payments.

It is often stated that one should place the maximum amount into cash NISA’s in order to fund for school fees but with interest rates of 0.5% is this really sensible?

In order to fund school fees tax efficiently you need to ensure you take advantage of any tax breaks on available.

For best results with your schools fee planning you should seek out an adviser who can provide :-

  1. Financial planning and cash flow modelling.
  2. Tax planning know-how.
  3. Strong guidance on investments.

By planning your school fees at an early stage, injecting a large capital sum AND taking advantage of tax breaks you could reduce your overall fee burden by as much as 25%.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.