The material on this website is for information only
and is not intended as any recommendation or endorsement of any products or companies mentioned. We are not licensed by the FSA to give financial advice, and none of the material on this website constitutes or is intended to constitute financial ...
News
International AdviserUK IFA ordered to undo 'inappropriate' illiquid investmentsInternational AdviserThe 50-year-old fitter, who at the time earned £24,000 per year, was advised to transfer his pension plan in to a self-invested personal pension scheme (Sipp) and invest £22,500 in Store First and £28,754 into the Vanguard Balanced Fund. The ...
Post Brexit: Five key reasons to review your financesTelegraph.co.ukBy doing this, you're able to keep in control of your finances, check whether you're still on course to meet your goals and make any necessary changes along the way – which could make a huge difference to your financial future. There are many ... It's ...
BT.comEight great benefits credit cards offer if you use them wiselyBT.comSince its introduction the use of the credit card has seen significant growth with 31 million packing one and monthly spend thought to exceed £15 billion according to the UK Cards Association. While some see credit cards as existing purely to get ...Credit cards turn 50Moneywise Magazine50 Years On For The Credit Card And We're Deeper In DebtiExpats.comall 7 news articles »
Brexit reassurance, housing uncertainty and UK borrowingSpectator.co.uk (blog)Meanwhile, Nandini Ramarkrishnan, global market strategist at JP Morgan Asset Management, told BBC 5 live's Wake Up To Money that it was 'a pretty momentous event' when earlier this week the yield on UK 10-year gilts (government debt over 10 years ...
This is Money'Pension time bomb' warning: Annuity rates slashed 8% and final salary deficits widen as Brexit vote sees gilt ...This is MoneyA collapse in gilt yields - the interest earned on UK Government bonds - could be building a 'pension time bomb' as annuity rates are slashed 8 per cent and final salary scheme deficits widen after the Brexit vote. Both annuities and final salary ...and more »
Have you met...
Latest Members:


marwasaf


lolo


danny


midomidi2013


asmaasaad


shazly


ser1es

 

Saving for your children's education.

Five top financial tips for parents

Start saving early to send your children to school and university. As more people face reduced pay packets or even redundancy, saving and planning for your children’s education has become even more important.

In addition to reduced incomes, families have also seen the average school fee increase by more than 10% a year over the past few years. Little help is available to parents as specific ‘school fees funding products’ can no longer keep up with this increase and have been withdrawn, and despite many private schools being registered as Charitable Trusts, school fees are not eligible for tax relief.

As well as school fees, parents also need to be prepared for university costs to increase.

Now that university is considered to be a normal part of higher education, Geoff Everett, tax director at Smith & Williamson, is concerned that fees may increase at a similar rate as school fees.

He says: “If this happens, in 10 years’ time we could see fees reach £7,200 a year. Living expenses and books cost roughly the same amount as fees, so if we use a scenario where the fees rise by 10% and the living expenses rise by 3%, the combined annual cost for a single student in 10 years’ time could be over £11,000 a year.”

So what can parents do to prepare for these costs?

Geoff advises: “Start early. If your child is still relatively young, for example in junior education, there is still enough time to invest on a regular or lump sum basis.

“How you invest will depend on your particular circumstances but as far as possible parents should aim to minimise their combined tax bills by making full use of their tax allowances and the lower tax bands.  Tax-free opportunities such as ISAs should be considered for anyone aged 16 and above and don’t forget everyone, whatever age, has an annual tax-free capital gains allowance, currently of £10,100 (for 2009/10).  

“If you put income-producing assets such as shares or cash deposits into your child’s name, as a parent you will generally be taxed on the income. However, if the asset comes from others, for example grandparents, the child can receive income up to £6,475 per year tax-free, so this can be a very tax efficient arrangement. It may also result in inheritance tax savings for grandparents.

In addition there is a valuable IHT relief for regular gifts within normal expenditure. This means that if grandparents pay school fees on behalf of their grandchildren, or make regular gifts to the children in anticipation of school fees or other expenses, those payments would escape future IHT liability provided the grandparents are left with sufficient income to live on.

It’s also worth noting that capital gains are treated as the child’s even if you provide the assets, so a parent could gift or buy assets, which aim to generate capital gains rather than income, to a child and the child could sell them, making a capital gain each year of up to £10,100. The key is to plan ahead!”

Smith & Williamson’s top financial tips to help parents funding school fees or university costs:
•          Save early
•          Consider ISAs and other tax-free accounts
•          Take advantage of capital gains allowances, currently £10,100 per person per year, irrespective of age
•          A child can earn tax-free income from assets gifted by non-parents
•          Discuss with grandparents the possibility of them helping to pay school fees


Advertise with us  |  Privacy  |  Terms & Copyright                                                                                     Website maintained by USP Networks