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School fees funding is probably the No.1 concern for middle and middle-to-high income families who are planning on sending their children to private and independent schools. One if the necessary considerations regarding financial planning is taxation.
Thorough tax planning can help you pay your taxes more efficiently, which, in the long-run, can save you hundreds or even thousands of pounds on school tuition fees – as well as ensure that you are not presented with an overdue tax bill that you weren’t expecting.
This site, tax-advisers.be, offers tax planning advice that focuses on tax payment strategies and plans for parents and families who are planning or are in the process of sending their child/children to private and independent schools.
As well as our own tax advisors offering some insights into school fee planning in the UK on this site, we have also collated a selection of third-party (non-affiliated) resources useful for parents wanting to learn more about this subject.
The rising cost of private school fees in the UK
It’s a simple fact that tax efficiency – whether applicable to paying school fees, income tax, inheritance tax or even just claiming back value-added tax at the airport – saves you money. Paying taxes efficiently means that you are paying the minimum amount required by law (disregarding consideration of any tax loopholes).
However, the rising cost of private school fees in the UK, particularly over the last decade, has given even more importance to managing school fee taxes efficiently.
Currently, average private school fees in the UK are at just over £14,000, while Boarding schools charge an average of £32,000 for full board stays. That means, for a 14-year complete private school education, the total (average) costs would be between £200,000 – £400,000 per child, depending on the level of the school and the location.
These really are staggering costs considering the alternative (i.e. government-back public schools) are completely free. Of course, it’s normal to expect fees such as these to rise over the course of 10 or 20 years, but data shows that private school fees are rising much faster than inflation rates and average family incomes – meaning more and more parents are feeling the squeeze.
That said, recent studies have shown that of one-third of all parents still consider private education as an ‘investment priority’, citing reasons such as higher standards of teaching, smaller class sizes, improved connections and future career prospects for their children.
How financial and tax planning can help keep school fees affordable
The key to ensuring private school fees are kept both manageable and relatively affordable is all in the planning – but it’s extremely important that these plans are set up as early as possible.
Ideally, as soon as a child is born (and in the case that you intend for him or her to have a private school education when they’re older) you should start saving with a plan or contact an investment/tax advisors to offer advice.
Such savings/investment plans can include everything from small-interest savings accounts, specialized school plans, or riskier of options such as investing in stock and shares.
There are also flexible options in terms of how much you invest, and how often you make an investment payment. For example, some parents choose to put aside a lump sum all in one go or irregular multiple lump sums. Alternatively, some may set up regular payments directly debited from their monthly income and others may pay into a savings scheme (as mentioned above) that is locked until a certain activation date and will be directly put towards the child’s tuition fees.
Certain investment schemes, such as individual savings accounts (also known as ‘ISAs’) allow you to make tax-free contributions of up to £20,000.
Spreading your pre-existing funds across multiple investment schemes can also be a good idea as to avoid maximum taxation; but again, certain investments do pose a risk. Therefore, it is always advisable to make contact with a professional accountant or financial adviser to seek advice about school fees plan, investments and other related tax advice.
Tax-advisers.be – rest of the site
Planning early is key – but understanding the ins and outs of paying tax and school fees plans is also of high importance. Throughout the rest of this site, we have collated some useful links for parents and families to look through in order to gain a better understanding of this topic. Browse through to find our ‘Financial Planning Resources’, ‘Tax Resources’ and ‘EU Taxation Resources’. You can also get in touch with us here at Tax-advisers.be via our ‘Contact page’.