Financial planning for the next generation's school fees - sponsored feature

    • 08:00, 28 Feb 2015
    • Sponsored Content

Brewin Dolphin’s Head of Financial Planning, Jo Jackson, explains what parents can do to get ahead on school fees

Jo Jackson of Brewin Dolphin
Jo Jackson of Brewin Dolphin

When household finances are under scrutiny, the cost of funding your child through a private school education can often be a major commitment, so it’s never too late to put into place a financial plan to help to meet the cost of school fees.

Over the last 25 years, average annual day fees have more than quadrupled, according to a report conducted by the Centre for Economics and Business Research. Last year, the average cost of sending one child to a private school stood at £12,700 per year, compared to just £2,985 24 years ago. Boarding fees have become even more eye-watering, now standing at up to £28,800 a year – exceeding the UK average annual salary of £27,200, according to the Office for National Statistics – up from £6,800 at the start of the 1990s.

The report found that school fees rose by more than 300% during the period, while wage growth could only muster 76% by comparison, and the bad news is fees aren’t expected to dip any time soon – something you should again bear in mind when it comes to planning your budget.

What to do next

Square One Law, Brewin Dolphin and Deloitte have joined forces to offer advice on personal finance from a wealth management, legal and tax perspective.

For general enquiries about financial planning, please call on 0191 230 7060. This number will take you through to the Brewin Dolphin team who will pass on your query to the relevant expert.

Alternatively, fill in the form at the bottom of this article to outline your enquiry. Our experts will respond to your enquiry within three working days by your preferred method of contact.

The key issues you may need to discuss with an advisor are outlined as follows:

Help with school fees is at hand

However, among Independent Schools Council (ISC) schools, more money is being pumped into ‘fee assistance’, with 5.1% more support being available in the most recent school year compared to the last. ISC schools helped pupils cut the cost of fees by some £660 million through bursaries and scholarships in the last school year. Some 8% of its pupils received means-tested bursaries and, of them, 41.9% had more than half their school fees waived.

Whichever option you decide on, the best way to ensure you are able to afford the investment in your child’s future is to start saving and investing as soon as possible - and to do so tax efficiently.

Matthew Horwood / Media Wales Financial planning for the next generation's school fees
Financial planning for the next generation's school fees

Strategies to consider

There are a number of simple strategies to consider. The first option to consider is likely to be ISAs, along with directly held investments in the parent’s own name. This means that they will keep the right to access capital at any point with little or no tax liability through the ISA. In addition, the directly held portfolio can be used to take annual gains tax free if within the capital gains tax (CGT) allowance.

Once ISA and CGT Allowances have been used, further capital can be held via an offshore bond. This also allows a portfolio to be invested without any immediate impact from taxation and also offers a facility for 5% per annum to be drawn down, again without tax liability at the time, which is particularly useful when it comes to paying annual school fees.

Making best use of tax wrappers such as an ISA enables tax-free saving, providing further financial benefit over the long term – and, of course, the recent increase in the annual allowance following last year’s budget has made the ISA an even more powerful savings vehicle. We expect more and more parents to adopt such a strategy as the cost of school fees continues to rise.

What to do next

The mountain of school fees may loom large, but Brewin Dolphin’s financial planning service can make it a much more manageable molehill. We can work with you to tailor a suitable education funding strategy for you - and your family.

In every case, we start by learning more about your situation and your aspirations. To learn more about our financial planning service – whether you have arrangements in place or are seeking advice for the first time – please get in touch and arrange a no-obligation meeting with one of our Chartered Financial Planners.

Square One Law, Brewin Dolphin and Deloitte have joined forces to offer advice on personal finance from a wealth management, legal and tax perspective.

For general enquiries about financial planning, please call on 0191 230 7060. This number will take you through to the Brewin Dolphin team who will pass on your query to the relevant expert.

Alternatively, fill in the form below to outline your enquiry. Our experts will respond to your enquiry within three working days by your preferred method of contact. If you can't see the form below - click here to open in a new window.

Any investment mentioned in this article is for illustrative purposes only and is not intended as investment advice. Any tax advantages mentioned are based on current legislation accurate at the date of print which is subject to change. The opinions expressed in this document are not the views held throughout Brewin Dolphin. No Director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents

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