School Fee Planning aims to ensure that you have enough money to meet school/university costs as they arise.
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
The Financial Conduct Authority does not regulate on School Fee Planning.
The Financial Conduct Authority does not regulate on Estate Planning.
Equity Release is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.
For mortgages we give clients the option to pay by fee rather than commission. The level of fees will vary according to individual circumstances, but will typically be 0.5% of the loan amount.
There are other providers of Payment Protection Insurance (short-term Income Protection) and other products designed to protect you against loss of income. For impartial information about insurance, please visit www.moneyadviceservice.org.uk.
- IDFM (City) Ltd take an innovative, unique and holistic approach to ‘School Fee Planning’.
- Using interactive ‘Lifetime Cashflow Modeling’ software we can clearly illustrate how your ‘School Fee Planning’ works.
- Using ‘what if’ scenarios we can model other possible outcomes.
- We build lifetime relationships with our clients.
- We are committed to delivering impartial ‘School Fee Planning’ advice by operating a transparent fee-based charging structure.
- Typical solutions include the following:
- Funds can be made available from equity in your property where possible.
- We can arrange a flexible mortgage that withdraws cash only when it is actually required to cover fees, thus minimising the overall cost.
- This facility to drawdown cash can be used to help fund fees.
- Another route is to take out a loan. You can get secured or unsecured loans. Secured loans, where you put up collateral to protect the lender against you defaulting are often cheaper than unsecured loans. The most common secured loan is obviously a mortgage, but many people have loans secured against other assets. Remember that the whole point of a secured loan is that if you fail to make the repayments you could end up losing the asset you took the loan out against; missing your mortgage payments could result in your house being repossessed. Unsecured loans, overdrafts and such like are often materially more expensive than secured loans.
- Tax relief is not available on school fees.
- Investments and deposits can often be arranged so that the capital is invested in assets which do not produce any taxable income, or in assets that produce income which is partially exempt from tax. In this way, it is possible to reduce taxable income considerably and therefore the total tax bill.
- Investment strategies can be structured to take greater advantage of the favourable tax position of investments that are mainly subject to capital gains tax rather than income tax.
- A significant proportion of your pension can be taken as cash at the age of 55 even if you don’t want to draw income at that time.
- You may also continue to build up your pension fund after the withdrawal of the tax free cash and take further cash payments.
- You receive tax relief on money paid into pensions; so you can get up to 50% tax relief on your investments. This means that instead of having to invest cash that has been taxed, you can invest, via your pension fund i.e. cash that has received tax relief.
- The savings are obvious – you avoid tax on the lump sum. If you had a £1,000,000 pension fund and you withdrew a quarter of it you could avoid tax of up to £125,000 (50% of £250,000). That’s a few years of any school fees!
- Remember that taking money out of your pension will reduce the size of your pension fund and the size of your subsequent pension. Remember also that pension savings are locked away until retirement, whereas you can access regular savings accounts (some of which will charge you penalties if you withdraw funds ahead of schedule).
- Grandparents wishing to contribute to the funding of their grandchildren’s private education can set-up a trust for grandchildren either during your lifetime or in their will.
- Where capital has been provided by a grandparent, any income credited to the trust is treated as the child’s income. Each child is entitled to their own personal pre-tax income allowance. Similarly capital gains arising are also attributed to the child and therefore each child’s annual capital gains exemption can be applied.
- Trust planning can be useful for grandparents who wish to achieve Inheritance Tax benefits at the same time.
- Trusts offer the benefit of transferring the tax liability on future income and capital gains to the children to utilise their personal annual allowances. Chargeable gains on life policies may also be re-assigned, which could avoid a higher rate tax charge. It is important to take advice on the correct trust arrangements for the investments held.
- It is possible in some circumstances to transfer an existing capital gain to the trust, avoiding the need to settle the tax bill on transfer. The capital gain will later be assessed against the beneficiaries or the trustees; however indexation relief will be lost.
- Trust planning is not suitable in every situation.
- Many parents pay the majority of their school fees out of income. Problems arise when the principal parental income ceases due to :
- – Redundancy
- – unemployment or accident and sickness
- – Critical illness
- – Death