School and University Fees Planning

School and University Fees expenditure and tax planning, has become very popular for many families because good quality independent education is an increasingly high priority. Parents echo concerns of current pressures on the state school system and differing educational practices. Children now continue their formal education into their early twenties and many parents appreciate the values associated with an independent education.

This has created new financial demands on families, many of whom need to plan immediately for the imminent financial commitment of a child's education. These new commitments not only relate to the fees but now frequently involve meeting the young person's living expenses whilst at college or university. This has become particularly important since the changes to student grants.

Making short or long-term financial provision for a child's education is easily arranged. It can help meet such a commitment sometimes eradicating and often reducing the amount required from income by 50%. Some of the possible ways of doing this include:

Earmarking capital: By putting a lump sum to one side and investing it wisely, a good proportion of the cost can be generated from investment returns. Combining this strategy with tax efficient investments and the use of suitable trusts can greatly ease the burden over time.

Mortgages: Some lenders now offer schemes which only charge you interest on the difference between the amount you are currently borrowing and the amount you hold in current and deposit accounts and have flexible schemes allowing you to increase your borrowing to a predefined limit when required.

Grandparents: Lump sum gifts to suitable trusts for the education of grandchildren can not only assist with the payment of fees in a very tax efficient way but can also be a useful way of reducing the Inheritance Tax liability on their estates.