CASE STUDY

How a conversation with our trust expert has enabled two grandparents to help towards the education of their grandchildren, saving £15,000 per annum.

THE SITUATION

We were approached by a couple of grandparents who were looking to help their children fund school fees payments for the grandchildren. The couple who approached us owned two separate businesses. After talking with them, we established that their son and his wife both worked within the businesses and were paid salaries through PAYE.

The Client's Objectives

The son and his wife have three children, two of whom are in private education. They were looking at ways of helping become more tax-efficient and the grandparents were keen on assisting with the funding of the school fees in whatever way they could.

We were sending Aidan & Calum to school at a cost of £38,000 per annum. This service has enabled us to reduce our school fees burden by £18,000 every year.
Mr & Mrs S, London

OUR SOLUTION

From talking with them, and after discussing asset protection and inheritance tax planning, it was agreed that the following be done:

1

We would form a group structure, as although the two businesses were separate, they share resources and facilities including premises

2

We therefore formed a new holding company (Newco) and brought the two separate businesses in as two new 100% owned subsidiaries by way of a share for share exchange.

3

The grandparents then owned Newco 50:50 in the same way that they had previously owned the two separate trading entities.

4

We created a new share class, having rights to capital insofar as they would only accrue value after their creation

5

The grandparents gifted shares to the son and daughter in law, giving them a direct equity stake in Newco

6

The grandparents then formed a Family Trust and settled some of the newly created shares into it.

The Value to the Client

  1. We established a Group in order to provide a platform for asset protection for the shareholders and an environment whereby results of the trading entities would remain separate but held in one legal structure
  2. We gave the company the option to now partially remunerate the son and daughter in law by way of dividend, as they are now part owners in the company
  3. We started the grandparents on the road to an effective succession and transition of management/ownership to the next generation
  4. We helped to establish a Trust for the grandchildren, which, in future, may provide a dividend income for the grandchildren directly

Contact ELEVATION about School Fees Planning

Call us on 0121 411 0488 or email us using the form below:

Elevation Investment Management Ltd. Registered in England & Wales No. 04794182. Registered Address: Unit 1, Marlin Office Village, 1250 Chester Road, Birmingham, B35 7AZ. Authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register No. 456358 at www.register.fca.org.uk. The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.

Should you have cause to complain, and you are not satisfied with our response to your complaint you may be able to refer it to the Financial Ombudsman Service, which can be contacted as follows: The Financial Ombudsman Service Exchange Tower, London, E14 9SR. Tel: 0800 023 4567 or 0300 123 9 123 or www.financial-ombudsman.org.uk.

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Some of the possible solutions are high in investment risk and will not be suitable for everyone. We would provide detailed recommendations to help you in this regard. Paying fees through a Limited Company have some complicated rules and may not be appropriate for all firms. Levels, bases of any reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The value of an investment can go down as well as up. Past performance is not a guide to future performance.