Tax allowance

[temple]

Our two sons 14 and15, are currently at a fee paying school and hopefully will eventually go to university.

As a means of helping to cover their educational costs into their twenties we have envisaged the purchase of a buy to let property in their names (with a nominee involved until they reach the age of eighteen). Their rent being used to assist with the cost of their school and university fees.

Presumably their entitlement to standard tax relief on their rental income will mean that virtually the entire rental income can be devoted to the cost of their school and university fees.
Advice on the validity and feasibility of this arrangement would be greatly appreciated

[AdamS93]

Google perantal settlement. There is anti-avoidance legislation meaning the rental income will be taxable on the parents until they reach the age of 18.

Also, they will not benefit from the reliefs for first time buyers in the future as they will already hold an interest in a property.

It is good you’re planning in advance but you should seek tailored professional advice. It will be worth every penny in the long run.

[birdsong]

This scheme should work if the children's grandparents bought them the property, although there would be a PET for seven years on the grandparents estate.