School Fees Planning

The cost of private education is likely to be one of the largest financial commitments your family undertakes. Without proper planning, the expense can place undue strain on your finances and potentially jeopardise your child’s education.

By spreading the cost over time and incorporating effective tax planning, school fees planning not only makes private education more affordable but can also help protect and even grow your long-term wealth.

Seeking specialist advice ensures you can create a tailored plan to safeguard the continuity of your child’s education, even if unexpected changes, like illness or job loss, occur. With the right strategy, you could significantly reduce the cost of education – sometimes by 50% or more – while maintaining financial stability for your family.

Specialist school fees planning requires expertise beyond general financial advice. Amber River SFIA advisers are fully qualified and receive advanced training specifically in school fees planning. Unlike non-specialists, they have the knowledge and tools to forecast costs, identify savings opportunities, and develop strategies to minimise the financial impact of school fees. With their support, you’ll benefit from advice tailored to your family’s unique circumstances.

There are a variety of reasons why so many people choose Amber River SFIA, but in summary:

• We specialise in school fees planning and have a network of experts throughout the UK
• As independent financial advisers we offer unbiased advice and select products from the entire marketplace
• We are a well-established organisation able to gain preferential rates for our clients

While exact savings will depend on your unique circumstances, it’s possible to significantly reduce the financial burden of school fees with careful long-term planning. Savings can be achieved by selecting the most effective investments, accessing equity in a tax-efficient way when needed, and implementing thoughtful tax planning strategies. With expert advice, you can make private education more affordable without compromising your family’s financial stability.

Yes, most independent schools offer scholarships and bursaries. Scholarships are often based on academic, music, art, or sporting excellence, while bursaries are means-tested and can cover part or all of the fees for eligible families.

Some schools offer discounts for paying fees in advance, often called “fee prepayment schemes.” These schemes allow you to lock in a fixed fee rate, which can provide savings, especially in a rising-cost environment. However, this should be considered carefully, as it requires a substantial upfront payment.

The removal of the VAT exemption from 1st January 2025 has increased fees by 20%. This change means families must account for a significant rise in costs, making financial planning more important than ever.

Yes, there are several tax-efficient strategies that can help reduce the cost of private education. While older covenant schemes have been abolished, there are still many opportunities to explore, such as:

• Children’s annual income and capital gains tax allowances
• Annual tax-free investment allowances, such as ISAs (up to £20,000 per year per parent)
• Pensions, which can release funds tax-efficiently if you’re over the minimum pension age
• Trust planning, including bare trusts to help grandparents or other family members contribute
• HMRC-approved investment schemes
• Re-assigning life policies or investment bonds to take advantage of different tax rules
• Offsetting school fees against a personal mortgage for potential tax-free returns
• Opportunities available through offshore investments

Each family’s circumstances are unique, so working with a financial advisor can help you identify the most effective tax-efficient strategies for your situation. With expert advice, you can reduce the financial impact of school fees while protecting your family’s long-term wealth.

If you haven’t built up enough funds in advance, the alternatives are to pay-as-you-go out of income or borrowings. A common solution is to release equity from your property to make school payments and plan to pay back the borrowing over a longer period. A School Fees Pension Plan will allow you to pay the borrowings out of you tax free lump sum and realise an increased income from your pension.

Grandparents can gift money towards school fees without triggering inheritance tax, using their annual gift allowance of £3,000 per person. Alternatively, they can set up a bare trust or other tax-efficient structures to contribute to school fees.

Planning for multiple children requires a long-term strategy that takes into account overlapping years of education. A financial planner can help create a cashflow model, identify savings opportunities, and ensure your plan is sustainable across multiple children’s school years.

It may be possible to set up an efficient draw down of capital secured against your property to spread the cost of school fees over a longer time period. You only pay interest on the money that is gradually withdrawn.

It is possible to apply for an insurance plan which will pay a monthly tax-free benefit in the event of death or diagnosis of a critical illness. The cost of this cover will depend on the level of the benefit, your age and state of health.

In addition to tuition fees, families should budget for extras such as uniforms, school trips, exam fees, extracurricular activities, sports equipment, and technology like laptops. These can add up to an additional 10–15% of the annual fee.

Unexpected events like job loss, illness, or divorce can affect your ability to pay school fees. Having a financial plan in place, along with appropriate protection like life insurance or income protection, can help safeguard your children’s education during challenging times.

Some schools offer occasional or ad-hoc boarding which means children stay the occasional night (or nights) on a one-off basis; this could help parents who may be considering a move to boarding for their children or who are going to be away for a short time and would find it advantageous to know their son or daughter can be well cared for on the school site.

For more information on boarding you might also find the Boarding Schools’ Association (BSA) website useful.

This depends on your family’s priorities and goals for your child. Many parents value smaller class sizes, better facilities, and broader extracurricular options. It’s a personal decision that should align with your financial ability and aspirations for your child’s future.