Are you thinking of sending your children to private school? You may need to juggle your finances.
According to the Independent Schools Council (ISC), the number of pupils in private school education is now at 544,316; the highest level since 1974 when records began with nearly three in 10 new pupils joining ISC schools from state-funded schools1.
If you are considering sending your children to private school the key to ensuring you have sufficient funds is planning in advance and planning thoroughly. This means not only having enough money for the fees themselves, but accounting for inflation and additional expenses.
How much are private school fees in the UK?
Recent figures show the average cost of a UK private day school is around £17,000 a year. Boarding school fees are around £40,000 a year2.
If you choose to send your child to private day school from the ages of seven to eighteen, it will amount to approximately £187,000 and nearly £440,000 for boarders. There are also trips abroad, sports equipment, uniform and extra-curricular activities to take into consideration, in addition to education fees.
The top ten private schools in the country are more expensive, so if you’re planning on sending your children to one of these schools, you are beginning to look at a significant investment.
Factoring in inflation
Private school fees do not track inflation, they exceed it3. If you don’t want to find your hard-earned savings are tens of thousands of pounds short when the time comes for your child to attend private school, thorough financial planning is essential. If you are saving already, your strategy may need reviewing.
With the help of an Independent Financial Adviser you could save and create a pot of funds which can be used to educate your children in the way you hope for.
Diversify | Start planning early
Open a Cash ISA
The tax-free allowance each year is £20,000 per person4. If you are married or in a couple, that amounts to £40,000 between the two of you. If you start saving when your child is at a young age you could be well on your way to saving enough for your child to attend private secondary day school.
Consider the following investment strategies:
- Stocks & Shares ISA
- Unit Trusts
- Venture Capital Trusts (VCTs)
- Enterprise Investment Schemes (EIS)
Investments can help protect against inflation, whereas the value of your savings can be eroded over time. A combination of both savings and investments can often be an effective strategy in working with the timing of your financial plan around your child’s education. You could draw on savings for the first few years of your children’s schooling, then ‘buy time’ to allow for returns on your investments to potentially come into effect, which could be used to fund the middle and final stages of your child’s education.
Talking to one of our Independent Financial Advisers regarding managing your savings and investments to cover the costs of education can make the difference between successful funding or a financial shortfall.
Premium Bonds
Saving into premium bonds can also play a part in your financial strategy for funding private schooling. The maximum limit is £50,000 per person and again, like ISAs, they are tax free – plus you have a chance to win cash on prize draws5.
Grandparents can contribute towards your children’s school fees by using their tax-free gift allowance. Under current legislation one grandparent can ‘gift’ up to £3,000 tax-free annually and this amount will not be subject to Inheritance Tax6. If there are four grandparents in the family, that amounts to £12,000 each year, which is a large contribution towards private day school fees.
Another avenue to explore with one of our Independent Financial Advisers is ‘Potentially Exempt Transfer’ which means a grandparent can ‘gift’ any amount of money to anyone (including your grandchild) if they live for seven years or more after the gift is transferred7.
There are other options around grandparents gifting money to their family which could contribute towards private schooling and again, our Independent Financial Advisers can help with this. You can also read more in our Advice Zone article.
The sooner you can start planning finances for funding a private school education for your child or children, the more streamlined the process can be.
Talk your options through with one of our expert Independent Financial Advisers.
What matters to you, matters to us
- https://www.isc.co.uk/research/isc-census-infographic-2022-text-description/
- https://www.goodschoolsguide.co.uk/choosing-a-school/independent-schools/private-school-fees-worth-value-for-money
- https://www.schoolfeeschecker.co.uk/blog/school-fees-2022.php
- https://www.gov.uk/individual-savings-accounts/how-isas-work
- https://www.nsandi.com/products/premium-bonds
6-7. https://www.gov.uk/inheritance-tax/gifts
Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Please note that investments in a Stocks & Shares ISA are not guaranteed and can fall in value as well as rise. Ultimately you could get back less than you invest. Calls may be recorded for use in quality management, training and customer support.
