School Fee Planning

We believe providing a good education can be one of the most valuable gifts parents or grandparents give to children.

Moving Forward Together

While the financial implications can be daunting, the key to affording school fees is to plan as early as you can. For many, inheritance or income will provide the main source of funding, but saving soon after a child is born can help to build a fund over ten years, ready for when they go to senior school.

WHY IS PLANNING IMPORTANT?

The pinnacle aim of financial planning is to provide for and safeguard the future. For those of us that are planning on having a family, being able to provide for our children’s education is a prevalent goal.

Proper and effective financial planning is the cornerstone to achieving the goals we set out for ourselves in life. If providing the best possible education for you children is one of your life goals, we at Southover Wealth can advise you on the right financial planning to give you and your family the means to do so.

WHAT TO EXPECT.

In 2023 the average fee for one year at a private school in the UK was 16,656.

(Source: Statista.com UK Private School Fees, November 2024)

This means if your child were to enter into private education at age 5 the total cost would be an estimated £233,184 in today’s money.

If they were to enter the independent schooling at age 11 this would be around £133,248 (assuming the child staying until age 18).

This is without taking into account annual fee increases or inflation.

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Our personal planning services

Having established that saving as soon as possible to reap the benefits we can help you understand your options on how best to reach your goal.

ISA

The UK government currently allows an individual to save up to £20,000 per year into an ISA. Historically, returns from stocks and shares have outperformed cash. So a stocks and shares ISA may be a better choice if growth is your goal, depending on if this aligns with your risk tolerance. Any growth within the ISA is free from income tax and capital gains tax.

Unit Trust

Once your ISA annual allowance has been maximised, you can continue to save into a Unit Trust which can reflect your ISA investment portfolio and its projected returns but without the same tax allowances..

Junior ISA

A Junior ISA is available to any child under 18 and carry an allowance of £9,000 for the tax year. The Junior ISA is a good savings vehicle for university fees as the funds can be withdrawn by the child once they reach the age of 18.

Gifts

Grandparents who may want to help pay towards their grandchildren’s education can make regular gifts. Regular gifts out of surplus income (e.g. pension income) that do not affect their own lifestyle are exempt from Inheritance Tax, providing the person who makes the gift lives another seven years..

Trusts

Another tax efficient option would be to set up a ‘Bare Trust’ on behalf of the child. Grandparents or other family can gift the money to the child, but they have full control over the assets and where they are invested until the child is aged 18. This allows the use of the child’s Income Tax and Capital Gains Tax allowances, which are typically available in full as children very rarely have any other taxable income.

For advice tailored to your individual circumstances please get in touch.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested. An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances. Trusts are not regulated by the Financial Conduct Authority.