Easing the pain of school and university fees
by Alan Moore - Tax Partner on 12 April 2012
Another bank holiday, another academic term - another payment due?!
Many parents still choose to privately educate their children, despite the increasing cost of doing so. Often parents can be paying over £10,000 per year – and in the case of boarders it could be treble this amount! Add to this the cost of extra-curricular activities and the cost for some parents with more than one child can be huge.
Investment in private education is also usually long term, lasting up to 20 years per child. Unfortunately the funding for this has to come out of taxable income, which can be a major problem for anyone on a high tax rate.
There is however an innovative way that families who are also business owners can address this tax burden, by using a Trust settled by a grandparent or more remote relative. A tax efficient trust can be set up for a child at any age and run for as long as required, with income arising from the Trust being used to cover the cost of school and university fees.
The scheme is more attractive than other alternatives as little initial capital is required – and can result in significant savings.
So why not take advice from your tax specialist, and at least reduce the impact of this burden on your finances!
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