School fees can be expensive, but they needn’t be out of reach. The earlier you start planning the better but it is never too late to start, even if your children have already begun their schooling elsewhere.
Family income will naturally be put under increasing pressure as your children get older, with outgoings seemingly increasing all the time. Add school fees into the mix and it can seem like it’s all too much but spreading the cost of school fees beyond the schooling period makes them more affordable and maintains your natural standard of living.
It may be necessary to utilise the equity in your property to help fund school fees. In this scenario, Elevation would ensure any mortgage obtained is flexible enough to allow funds to be available when required rather than before. This would minimise any interest payable on the loan. The mortgage would be repaid within a sensible timescale within the resources at your disposal.
Tax relief is not directly available from school fees themselves but it is possible to arrange investments that attract significant tax relief or that produce little or no taxable income. It may be beneficial to invest in assets which create a capital gain rather than income, allowing you to take advantage of your Capital Gains Tax allowance rather than be taxed on any income produced.
School fees pension plan
A pension plan 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 greater than the cost of the school fees themselves.
Strategies for higher rate tax payers
For higher rate taxpayers, your personal allowance is eroded once income exceeds £100,000, but here at Elevation, our team of Independent Financial Advisers can draft a solution that effectively provides tax relief at 60% at this level.
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