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Where Taxpayers and Advisers Meet

School fees

Ifeanyi
Posts:10
Joined:Wed Aug 06, 2008 3:54 pm
School fees

Postby Ifeanyi » Sat Jan 30, 2021 2:43 pm

Hello,

We would like to be able to send our two children to private school.

I am a higher rate tax payer and my wife is not currently working but training to be a teaching assistant.

We have two children 4 & 6 and hope to send them private schools from the ages of 7 through to 18.

Our approach to date has been to save via cash & stocks and share ISAs, with the hope that the compound growth could be used to pay their school fees.

I am also considering salary sacrifice as on option in order to contribute more to my pension, but am not totally sure.

However, these ideas all seem to focus on paying school fees from post-tax income so I am interested in understanding how other people pay for private school fees given the increasing costs of private schooling.

I would welcome any ideas.

Thanks

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: School fees

Postby AdamS93 » Sat Jan 30, 2021 8:18 pm

If you're a PAYE employee, there is very little you can do tax planning wise. If you run your own business, there is the option of paying dividends to wife/grand parents to cover school fees, but it doesn't eliminate the tax costs.

Not a tax point, but over the last year I know individuals who pay £8k a term for a few hours of zoom teaching each day. There has been very little value for money over the last 12 months.

ben_power
Posts:81
Joined:Tue Feb 27, 2018 8:34 pm

Re: School fees

Postby ben_power » Sun Jan 31, 2021 7:21 pm

Unfortunately there are not many options to you other than S/S ISAs, however, taking on risk knowing withdrawals will be made inside 5 years needs to be carefully considered. Shorter investment timeframes essentially increase the risk.

As for salary sacrifice, this is certainly a sensible idea for retirement planning although the earliest you will be able to access this will be 55 so unlikely to solve the school fees issue.

Ifeanyi
Posts:10
Joined:Wed Aug 06, 2008 3:54 pm

Re: School fees

Postby Ifeanyi » Tue Feb 02, 2021 12:31 am

Thank you both for the responses.

Another thought. Although our children's grandparents are not cash rich, having an asset in the form of their residential property. Could they contribute by gifting up to £3000 worth of their residential property annually to a trust with the children as beneficiary?

Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: School fees

Postby bd6759 » Tue Feb 02, 2021 7:01 pm

Another thought. Although our children's grandparents are not cash rich, having an asset in the form of their residential property. Could they contribute by gifting up to £3000 worth of their residential property annually to a trust with the children as beneficiary?
How do you propose converting a share of the house into a liquid asset that the school will accept as payment of their fees?

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: School fees

Postby AGoodman » Wed Feb 03, 2021 12:31 pm

Also, why £3,000 per year?

It's possible in theory but administering it each year (valuing the property/new declaration of trust/trust registration) would cost over £1,500 plus the grief of organising it.

Ifeanyi
Posts:10
Joined:Wed Aug 06, 2008 3:54 pm

Re: School fees

Postby Ifeanyi » Thu Feb 04, 2021 11:43 pm

Thank you all for the responses. It seems the options are to build savings via cash and s&s ISAs, and other investment such as property. The options of gifting £3000p.a. via the grandparent's property seems impractical. There are firms claiming to offer school fee financing products, but I am not too sure how these really work or if hard earned savings will go out as fees.
Thanks All


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