With the average annual fee for private schools now £36,000 (£12,000 per term) for boarders and £15,191 (£5,064 per term) for day pupils 3 , making the decision to privately educate your child is a big step and a massive financial commitment. In addition to fees, added extras such as registration fees and funds to cover things like outings, uniforms and clubs, all need financing

School fees are likely to rank amongst a family’s largest expenses, so starting to save as early as possible and encouraging family members to contribute to savings accounts, will help you accumulate the sums you need to cover all the costs involved.

Start early and be savvy with your exemptions and allowances

Investing could be a good option if you have a longer time frame, say ten years plus. Although there are risks involved, investments do provide the potential to offer more favourable returns than those derived from a savings account; however, this is certainly not guaranteed. By investing money monthly, you can benefit from pound cost averaging, to smooth out any market volatility

Making the most of their own ISA allowances, (£20,000 for the 2021/22 tax year), parents can invest and pay no tax on their returns, as well as withdraw their money without incurring tax. In addition, grandparents may choose to make use of lifetime gifting, which can have the dual benefit of reducing the value of their estate for Inheritance Tax purposes and deriving satisfaction from seeing their money benefit their grandchildren during their lifetime.

Striking a balance

Not advisable for all, but in some instances, older parents are choosing to take their 25% tax-free lump sum from their pension to fund their child’s education, leaving the rest invested for income in retirement. If this is a possible strategy, it is important to leave enough for retirement. This may impact on your income in retirement and could affect the amount of money you contribute to a pension. When embarking on a major financial commitment to your child’s education, taking financial advice will ensure you don’t compromise your own financial security, helping you plan effectively for the years ahead.

3 ISC, 2021

It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.

Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Tax, Estate and Inheritance Tax planning are not regulated by the Financial Conduct Authority

The value of pensions and investments can fall as well as rise. You may get back less than you invested.

Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.

CA Financial Services Ltd are an Independent Financial Adviser based in Sevenoaks, Kent. From our Sevenoaks offices, we offer IFA services throughout Tonbridge, Tunbridge Wells, Dartford, Orpington and across into Sussex and Surrey. Please call us on 01732 617 950 to book a free initial appointment.

CA Financial Services offer financial advice, pensions, investments, ISAs, Equity Release and Inheritance Tax Planning for the whole family. We have 14 years’ experience as Financial Advisers based from Sevenoaks and are truly independent, allowing us to give our customers the best financial advice possible.

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