EDUCATION
While it ’ s important to consider the longterm affordability of the school and how it fits into your family ’ s financial boundaries and future plans , life is changeable , so researching the availability of financial aid , scholarships and grants is never a bad idea and also shows that in many cases , private school education is more accessible than you may have originally thought .
Schools spend their funds carefully but would usually look to provide further assistance to an outstanding candidate if it meant the child would be able to accept the scholarship and take up a place at the school , so make sure you know your preferred school ’ s exact position on both scholarships and bursaries before ruling it out ( or in ), and remember , in some cases
funding is also an option as there are some groups of children in the UK ( children with parents in the armed forces or civil service ; children with specific EHC plans ; and families struggling to pay school fees due to extenuating and / or tragic circumstances ) who may be eligible for state support with their private school fees .
PRIVATE SCHOOL SCHOLARSHIPS AND BURSARIES
Most private schools in the UK offer scholarships and bursaries to children who are exceptionally talented , and / or whose parents would otherwise be unable to afford the school fees . The value of these scholarships and bursaries can be worth as much as the full school fees , as little as the cost of a few course books and anything in between .
In recent years , private school fees have rocketed , but around one-third of pupils educated in the private sector receive some form of fee assistance , which is encouraging . Remember that good schools want able , affable and keen children . Many schools offer scholarships to attract the brightest and most talented , but you don ’ t have to have a child prodigy to land a reduction in fees these days . Bursaries are also given to children who meet the school ’ s academic standard but do not have the family finances to pay for a place , and as charitable foundations , many private schools are obligated to extend their provision to children who merit places but whose parents cannot afford the fees .
Dipesh Galaiya , private client tax manager at Kreston Reeves , offers his expert insight on how grandparents can gift school fees to their grandchildren to help with costs .
“ Grandparents ( and other family members ) can help with paying school fees and can make gifts up to the value of £ 3,000 per year to individual family members using the Annual Exemption . They can also make additional gifts in excess of £ 3,000 from surplus income . To qualify , the gift must be made from surplus income where the donor is still left with sufficient income to maintain their usual standard of living . This can also be a helpful way to reduce the value of an estate for Inheritance Tax purposes .
“ Grandparents can also place assets , whether property or cash , into a discretionary trust worth up to £ 325,000 every seven years on which Inheritance Tax can be mitigated upon survival for seven years . While the trust would be subject to income tax at 45 %, the income can be distributed to the grandchildren who may pay a lower rate of tax than other family members .
“ Wealthier grandparents might also consider setting up a Family Investment Company with multiple share classes and where shares in the company can be held for the grandchildren through a trust . Dividends can be paid to them via the trust also in a tax-efficient manner .
“ If you are considering ways to help pay for the school or university fees of a grandchild it is important to look at your tax planning as a whole to ensure that mechanisms such as Discretionary Trusts are set up in the correct way to maximise the tax benefits currently available . Ultimately , you may decide that just topping up the fees to cover the additional VAT is all that is needed to help your grandchild through to the next stage of their education .”
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