Surrey Homes | SH60 | October 2019 | Kitchen & Bathroom supplement inside

Education
“Setting up a bare trust is the most tax efficient method for grandparents to pay
the fees. The pros for this are that it is potentially inheritance tax free, can be
relatively straightforward to set up and makes use of the child’s tax allowances”
Are there any risks of school fee planning? Depending
on the route chosen, whether it’s to invest your capital in
a growth strategy or to focus on reducing a tax burden to
increase a future inheritance, there are always risks. Investing
puts your assets at the risk of stock market movements and
it must always be remembered that past performance is
no guide to future performance and as such it is possible
you could end up with less than you started off with. Tax
efficient strategies are at the mercy of HMRC as tax rules
can – and do – change, often without notice. In the current
political environment prudence in this regard is essential.
Another risk is that school fee payments are interrupted
due to the death of the primary provider. This can be
mitigated by insuring the appropriate person(s). The key is
ensuring you take appropriate advice from a wealth planner
or tax expert who can help put your school fee funding
plans into the context of your wider financial situation.
What are the pros/cons of parents/grandparents paying the
school fees? Setting up a bare trust is the most tax efficient
method for grandparents to pay the fees. The pros for this
are that it is potentially inheritance tax free, can be relatively
straightforward to set up and makes use of the child’s tax
allowances with any growth held outside of the grandparent’s
estate. The cons are the exposure to investment risk and the
fact that the child has access to the trust aged 18 which means
the assets cannot be preserved in trust for future generations.
Gifting is advantageous as it contributes to fees immediately and
can be tax efficient by using annual gift exemptions. However,
these gifts are limited to £3,000 a year per grandparent and
any gifts above this level may be taxable upon death, unless
the gift is using gifts out of normal income exemption.
For more information on how to plan for the future, contact
Simon at 020 7600 1660 or email to info@jmfinn.com
See Education with
Character in action
at our Open Mornings
Thursday Friday 2010 September October
Tuesday Thursday 12 10 November October
Book online at
www.bansteadprep.com/visit
SUTTON LANE | BANSTEAD | ADMISSIONS@BANSTEADPREP.COM | 01737 363600
147 surrey-homes.co.uk
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