SFIA School Fees
Planning Solutions

Your family income is likely to come under strain as children grow older and extra demands are put on it. As a result, the household finances can often creak under the mounting pressure, with school fees contributing to this significantly.

At SFIA, we can formulate a plan to help you pay for your school fees conveniently by spreading the cost beyond the schooling period. Not only can this make them more affordable, but it can also restore your natural standard of living.

Planning solutions normally comprise three elements: short-term cash flow resolution, tax-efficient wealth generation and assurance of continuous education.

Cash flow

Quite often, the most significant asset parents have is the equity in their property. In some cases, it may be appropriate or even necessary to utilise this ‘dormant asset’. If this is the case, we would ensure that the mortgage obtained is flexible enough to ensure that funds are available when required and not before. This enables parents to minimise any interest payable on the loan.

The second part of this strategy is the repayment of the loan. We will ensure this takes place within a sensible timescale and all within the resources you have available to you.

Investments

Although tax relief is not directly available on school fees themselves, there are ways of structuring payment into a plan to reclaim tax. It is possible to arrange investments that attract significant tax relief or that do not produce any taxable income or produce income that is exempt from tax.

It is possible to invest in assets which create a capital gain rather than income to take advantage of the favourable tax position of investments which are subject to Capital Gains Tax rather than Income Tax, i.e. the additional allowance and lower rate.

Our independent financial advisers can select financial solutions from the entire marketplace.

School Fees Pension Plan

This is often the best plan for those who qualify, enabling you to build up a substantially greater pension fund whilst paying off your school fees and, in some cases, generate tax relief that is greater than the cost of the school fees themselves.

For more details, see an illustrated example of a school fees Pension plan in the case studies section of our website.

Strategies for higher rate taxpayers

When deploying our tax planning strategies, we create plans for high-earning clients, paying higher or additional rates of tax, to take advantage of government-approved investments that qualify for significant tax relief.

These generous reliefs are being given to attract private investment to stimulate the economy and SFIA offers these investments when appropriate.

Trust planning

Trust planning remains a key facet of our business. This involves capital provided by a grandparent being treated as the child’s income, thus utilising each child’s personal Income Tax allowance. Capital gains can also be used, enabling each child’s annual Capital Gains Tax exemption to be utilised.

SFIA has also established a Corporate Trust Scheme that enables Business owners to pay school fees through their limited company and here are significant tax savings.

Tax planning solutions

Even if the above options are not suitable for you, there are other ways to reduce or recover Income Tax, Capital Gains Tax and Inheritance Tax, with the proceeds then used to help pay your children’s school fees.

Protection plans

It is important to ensure your children enjoy an uninterrupted private education. There are products available that protect school fees payment in the event of redundancy, unemployment or accident and sickness.