Parents understandably want to give their kids the best possible start in life and, for some, that means digging deep into their pockets for private education. At the moment, around one in every fifteen children attends a fee-paying institution, according to the Independent Schools Council (ISC), but the percentage climbs quite rapidly once you reach the post-16 age group. In fact, 18% of young people are privately educated after they’ve completed their GCSEs.
If you’re thinking of sending your own son or daughter to an independent school, it’s probably a good idea to have a chat with your accountant first, as you’re actually making a significant financial decision. Although some schools may offer discounts if you’re able to pay up front or have more than one child to educate, average fees for day pupils in the UK are over £3,300 a term, so unless you’re incredibly wealthy, you need to be doing some forward planning to cover the costs.
Of course, your capacity to shoulder the financial burden is closely inter-related with your other household outgoings. Perhaps you need to look again at your mortgage, for instance, and think about the way of getting the best possible deal. With some renegotiation, you might find you can change your payments or switch to a more advantageous rate.
What about ISAs? Remember that the limit for investment was raised this tax year to £15,000 (from 1July 2014), so make sure you make the most of your tax-free allowance. Every extra saving you can make is going to make a difference if you’re taking on a new and significant expense.
Although it’s obviously always good to take professional advice about your own finances, there may be other people in the equation too. Grandparents may be able to assist with fees and can possibly reduce their inheritance liability. They should also consider using a trust to make any contribution if they’re looking to maximise the tax advantage.
The overriding message is to plan ahead. Even if you might not intend to invest in private education for some years yet, it pays to start the discussion now.
If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk