The average termly fee for private schools has reached £12,000 (£36,000 annually) for boarders and £5,064 (£15,191 annually) for day pupils, according to the Independent Schools Council**
Planning for the future
It’s a big decision to privately educate your child; school fees could easily be a family’s largest expense after their home. Starting to save from day one and encouraging family members to contribute to accounts will assist you in accumulating what you need. If you have longer to save (10+ years) then investing could be a great longer-term option. While there is some risk involved, investments have greater potential to outstrip the returns you would get from a savings account (although this is not guaranteed).
Use your allowances and exemptions
By using their £20,000 annual ISA allowance, parents can invest and pay no tax on their returns, as well as withdraw their money without incurring tax. Meanwhile, grandparents can make use of lifetime gifting, which can have the dual benefit of reducing the value of their estate for Inheritance Tax purposes and seeing their money benefit their grandchildren whilst they are still around.
Other ways of funding a private education
In some instances, older parents are taking their 25% tax-free lump sum from their pension and using it to fund their offspring’s education. If you do this, remember it is important to leave yourself enough for retirement.
However you fund your child’s education, it’s important to take financial advice to ensure you don’t compromise your own financial security. We can help you plan effectively for the years ahead.