Brewin Dolphin : Helping your child make the grade for £249 a month

20 August 2014

Analysis by Brewin Dolphin shows that you could buy your child two years of private sixth form education for £249 a month if you save from the time of their birth. This represents a considerable discount from the average monthly rate of £1,631 if you do not plan ahead. The wealth manager has calculated that parents who start putting aside savings from birth are in a much better position to afford a private sixth form education, which many consider to be the two crucial years when preparing for university.

A long term savings strategy is the best solution for families facing increasingly steep school fees which continue to rise at above inflation levels. The average fee per term for attending a private sixth form (according to the Independent Schools Council's 2014 census) is £6,525, with the average termly rate for boarding schools rising to £10,041.

There are a number of simple strategies that can help parents save on a monthly basis in the most effective and efficient way. The first option for building up capital tax efficiently will be ISAs, along with collective investments in the parent's own name. This means that they will retain the right to access capital at any point with little or no tax liability via the ISA. In addition, the directly held portfolio can be used to take annual gains tax-free if within the capital gains tax (CGT) allowance. 

Once ISA and CGT allowances have been used, further capital can be held via an offshore bond. This also allows a portfolio to be invested without taxation (deferred rather than extinguished although there are various exit options) and this also offers a facility for 5% per annum to be drawn down, again without tax liability, which is particularly useful when it comes to paying annual fees.

"The rise in the cost of school fees is outpacing inflation, and most families who wish to educate their children privately must put considerable thought into how best to prepare for this, said John Fletcher, divisional director at Brewin Dolphin.

"As our calculations shows, private schooling is considerably more affordable if you simply plan ahead. Make sure you also make best use of wrappers such as ISAs which ease the burden further through tax relief, particularly following the allowance increase to £15,000 announced in this year's Budget. School fees are likely to continue to rise which, when combined with university tuition fees, means education is becomingly increasingly difficult for the majority to pay for without prudent financial planning.

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