Tips on saving for school fees as costs soar
· Use your full NISA allowance: With the increased limit on ISA allowance for both cash and stocks and shares, NISA’s are a tax efficient way to save for your child’s education as each allowance is still above the average yearly school fee. Parents should make use of both allowances to get the full tax benefit and should start saving as early as possible to be ready for school fee hit.
· Create a CGT efficient portfolio: Starting a portfolio for your children at birth could create enough income to support them through their private education. We would recommend ensuring they are diversified as possible splitting across various asset classes and sectors to offset risk.
· Start a bare trust: Bare trusts allow you to gain not just from the savings within the trust but any additional income gained from the trust which work well for ongoing financial commitments like school fees and the educational extras involves,
· Consider offshore Bonds: An offshore bond is an investment wrapper set up by a life insurance company, most usually in an offshore jurisdiction with a favourable tax regime, such as the Isle of Man, Dublin or Luxembourg. A wide range of investments can be held within this wrapper, making it not be subject to tax until funds are withdrawn from the bond. This is useful for the long term financial commitment involved with children’s school fees.
· School Fee Payment Plans: School fee plans are designed to help parents and guardians pay school fees. They often come with some measure of protection for your investment and can be tailored to your individual circumstances and needs. There are three main options.
· Re-mortgaging for equity release: Whilst we would not advocate equity release, parents have used this as a way to offset against the immediate cash needed for large lump sums like school fees. Some mortgage lenders allow you to release the cash tied up in your home without moving. You can either borrow money, which is secured against your home or sell part or all of your home This can give you a lump sum, a regular income, or both.