Schools Supp

the barrister

guide to independent schools

Supplement 2010

guide to independent schools | the barrister 2010

Contents: 4 6 8 10 12 14 16

Education Planning You could compare the expense of owning a horse to putting another child through private school. Depending upon your perspective, this may put you off having children, horses or perhaps both. Planning ahead will reduce the pain of education costs and Danny Cox, Head of Advice at Hargreaves Lansdown looks at the options.

Why choose an independent school?

Why choose an independent school?

The independent sector includes schools of many different styles and philosophies, including both the traditional and the more liberal. Each school has its own individual ethos and atmosphere offering parents a much greater diversity of choice than is

The benefits of tutoring – it’s not all about exams.

By Julie Morse, Gabbitas independent education consultancy

Investment and tax planning for school and university fees Henrietta Banbury and Frank Akers-Douglas of Smith & Williamson provide key tips on financing private and university education

The Merits of an Independent Education

By David Lyscom, chief executive, Independent Schools Council

Clever ways to fund school fees

By Jason Butler, Chartered Financial Planner

Funding for school fees

By Anne Gregory, director, Haysmacyntyre tax advisors

Education Planning You could compare the expense of owning a horse to putting another child through private school. Depending upon your perspective, this may put you off having children, horses or perhaps both. Planning ahead will reduce the pain of education costs and Danny Cox, Head of Advice at Hargreaves Lansdown looks Planning in advance

T

he start of any planning process should be to establish the goal: the extent of the potential costs and when they might start.

annuities. Both were expensive and inflexible and backed by the with profits model.

The school year is divided into three terms and fees are generally charged per term in advance. Typically costs range from £2,000 - £4,000 for prep school and £2,500 - £5,000 for senior school. Boarding is usually another £2,500 - £3,500 per term. Add to this the cost of uniforms and various sports kits, then extras such as musical instruments and school trips, and it is easy to see costs increase by a further 10%.

Nowadays, school fees plans tend to be standard investment portfolios, earmarked specifically to cover education costs or perhaps written under trust. As with any portfolio, tax efficiency is essential to improve the overall returns.

School fee inflation varies broadly with the economy, however, allow for between 4% and 6% per annum as being typical. A full education from prep school through senior school could easily cost over £200,000 per child (see Fig 1).

It is also important to consider that fees will inflate between now and when the child starts school (see Fig 2).

Discounting the fees In truth, there are few realistic options here. Most private schools have a small number of grants, bursaries and scholarships available.

Scholarships are usually awarded based on ability, aiming to attract the brightest pupils, but rarely do these meet more than a modest discount on the standard fees. Bursaries are generally means tested and limited in number. Grants might be available to families of the clergy or armed forces. Siblings at the same school might attract a 10% discount.

Fees paid annually or biennially in advance will attract a discount, generally linked to current interest rates – clearly not substantial under current circumstances. Monthly payment options are usually available at a premium (typically 6%), depending upon how they are factored.

Building a school fees portfolio As with all portfolios there should be a cash component to meet fees and costs in the early years. Cash ISA and National Savings Index-Linked Certificates can work well here as they offer tax free returns.

Stock and shares ISA For longer term investment of more than 5 years, stock market funds are more likely to produce school fee inflation beating returns, albeit with some downs and ups along the way. Sheltering these funds from further tax in ISA is the obvious choice. An ISA portfolio can be cashed in at any time without capital gains tax concerns – always useful from a school fees planning perspective – and, if income is drawn to supplement fees, it is tax free.

The full ISA limit is £10,200 per tax year per person and this will increase annually by the rate of inflation from April 2011.

Fund supermarkets are the most efficient ways to build ISA portfolios.

A fund supermarket offers greater choice, easier management and usually lower costs than investing direct.

What next after ISA

Meeting the fees In practise, school fees are usually met from parents’ disposable income, perhaps topped up from capital or support from family members.

During boom times, using equity in the family home became a popular way to meet all or part of school fees. In practise, extending borrowing is a risky strategy and ultimately expensive in that a mortgage and its interest is paid over a longer period than schooling.

School fees plans 20 years ago, there were two main types of school fees plan: For regular savers, a series of endowment plans which matured at the start of each year to meet fees; and for lump sum investors, a package of deferred

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guide to independent schools | the barrister 2010

After ISA allowances are fully used, my preference is to stick with investments in the capital gains tax regime, using collective funds such as unit trusts, rather than insurance based investment bonds. Capital gains tax is still charged at 18%, but only after gains exceed £10,100 in a tax year, as opposed to income tax which has a top rate of 50%.

This allows a strategy of cashing in unit trusts within the capital gains tax allowance annually to meet fees. Naturally stock markets don’t grow in straight lines. However, if low or nil yielding funds are chosen, combined with the correct use of capital gains tax allowances and the ability to offset losses against gains, any potential tax liability should be negated.

Generally taxable portfolios should be held in the name of the spouse

paying the lowest rate of income tax. Transferring funds between spouses prior to encashment is easy to ensure both use their capital gains tax allowances annually.

Account designations and bare trusts If capital gains tax allowances are already used, designating a unit trust under a bare trust will bump the tax liability onto the beneficiary. Upon encashment, profits are then within the beneficiary’s own capital gains tax allowance. Care is needed with the parental settlement rules and at 18 the beneficiary has an absolute entitlement. In practice these arrangements are usually established by grandparents.

Should capital gains tax increase, the annual allowance reduce, or even both, offshore investment bonds will look increasingly attractive for school fees planning.

Offshore investment bonds Offshore investment bonds benefit from gross roll up: virtually no tax until profits are taken. Withdrawals of capital, up to 5% of the original investment, can also be taken without immediate tax charge. The offshore bond’s potential disadvantage for most is that profits are taxed in the income tax regime, not capital gains tax and therefore potentially at a 50% rate.

However, subject to an assignment or under an appropriate trust, segments of offshore bonds can be encashed tax-efficiently to pay for school fees. 5% of the original capital value can be withdrawn annually without incurring any immediate tax charge and, on top of this, it may also be possible to use the child’s personal allowance of £6,475 in 2010/11 for further tax-free gains.

Offshore bonds are generally more expensive than onshore investments and a 10 year outlook is preferred.

Regular savings options After the death of the endowment, the first choice for regular savings is the ISA which start from as little as £50 per month. Following this, regular savings unit trust schemes are far more tax efficient, cheaper and flexible than the old style endowment based savings schemes and the investment options are significantly better.

Fig 1 Full school Age Fees per annum Inflation rate Culmulative cost 5 £8,250.00 6%

£8,250.00 6 £8,745.00

£16,995.00 7 £9,269.70

£26,264.70 8 £9,825.88

£36,090.58 9 £10,415.43 £46,506.02 10 £11,040.36

£57,546.38 11 £15,000.00

£72,546.38 12 £15,900.00

£88,446.38 13 £16,854.00

£105,300.38 14 £17,865.24

£123,165.62 15 £18,937.15

£142,102.77 16 £20,073.38

£162,176.16 17 £21,277.79

£183,453.94 18 £22,554.45

£206,008.40

Fees jump at age 11 when child goes into senior school

Fig 2 Year Fees now Inflation rate 2010 £9,500.00 6% 2011 £10,070.00 2012 £10,674.20 2013 £11,314.65 2014 £11,993.53 2015 £12,713.14 2016 £13,475.93 2017 £14,284.49 2018 £15,141.56 2019 £16,050.05 2020 £17,013.05

Securing their future Securing children’s education should also involve life, income protection and unemployment insurance. Schools provide insurance options however, in my view, the cost of school fees should be taken into consideration as part of wider insurance provision.

Danny Cox CFP Chartered Financial Planner Head of Advice

www.dentonspensions.co.uk

guide to independent schools | the barrister 2010

5

Why choose an independent school?

The independent sector includes schools of many different styles and philosophies, including both the traditional and the more liberal. Each school has its own individual ethos and atmosphere offering parents a much greater diversity of choice than is available to them in the state sector.

A school to suit your child

W

hile some parents are essentially concerned about

•

Systems for testing and assessment

academic standards, many are as concerned about other

•

Educational and careers guidance

factors that can make all the difference to their child’s

•

Special needs provision

happiness and wellbeing at school: the pastoral care; scope for

•

Pastoral care

developing a particular enthusiasm such as drama, art, fencing or even

•

Accommodation and health & welfare issues for boarders

polo; the availability of extra tuition if needed for a child who, while

•

Extra-curricular activities

brilliant at football, struggles with science or is mildly dyslexic. Some

•

Discipline and the school’s policy on issues such as drugs

children thrive in a more competitive environment. Others do better in

and bullying

a smaller, more homely setting where emphasis is more on nurturing creative and communication skills than aiming for Oxbridge. There is no

Fees

best school that suits all children equally. Consequently, there are many excellent, often lesser-known, independent schools that cater superbly

Fees vary widely but as a general guide, in 2009-2010 the

for children requiring a particular extra.

range of annual fees are as follows: Prep day: £7,500 - £15,000 Prep boarding: £12,000 - £20,000

Finding out about Independent schools

Senior day: £12,000 - £25,000 Senior boarding: £18,000 - £30,000

The Head of your child’s present school will be able provide you with some helpful suggestions. You may also want to conduct some further research of your own via the internet, local library or discussions with

Making a choice

other parents. For a more independent perspective, you might also consider approaching a reputable educational consultancy such as

After your visits, consider the relative strengths of each of the schools.

Gabbitas.

Focus on which factors are most important to you and your child? If you have difficulty deciding, it may be wise to trust your instincts. The right school is the one which will allow your child to achieve his or her

Visiting schools

potential in the company of liked and trusted staff and pupils, in an environment where he or she feels happy and at home.

After carrying out your initial research, the only way to decide whether a school is right for your child is to see it for yourself.

For impartial, professional advice when choosing an independent school, please contact:

There are various areas you might want to discuss with the Head during

Mrs Catherine Walters

your visit, including:

Gabbitas Educational Consultants

•

Academic policy and destination of leavers (some prep

Address: Carrington House,

schools prepare pupils for a limited range of senior schools)

126-130 Regent Street,

•

Exam results (a useful measure, especially when compared

London W1B 5EE

with results in previous years)

Tel: +44 (0)20 7734 0161

•

Qualifications and experience of teachers

E-mail Catherine.walters@gabbitas.co.uk

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guide to independent schools | the barrister 2010

GATEHOUSE SCHOOL

A creative, stimulating, academically challenging co-ed school for ages 3 to 11

• Teaching by specialist subject teachers from age 7 • Large, well equipped sports hall, plus located opposite Victoria Park • Children typically go on to: City of London Girls’, City of London Boys’, Highgate, Bancroft’s, Bedales • Gatehouse pupils regularly achieve scholarships to City of London Boys and Girls, Highgate, Bancroft’s and Forest

Sewardstone Road, Victoria Park, London E2 9JG

020 8980 2978 • admin@gatehouseschool.co.uk

• A leading independent boarding and day school for girls aged 11 to 18 • Situated in Surrey, 6 minutes from the M25 • Only 35 minutes from Central London • A wealth of academic and extra curricular opportunities

Open Morning - 19 June 2010 By appointment only, please call to arrange visit

Open Day - 2 October 2010 All welcome

Woldingham School, Marden Park, Woldingham, Surrey CR3 7YA t: 01883 654206 e: registrar@woldingham.surrey.sch.uk

www.woldinghamschool.co.uk guide to independent schools | the barrister 2010

7

The benefits of tutoring – it’s not all about exams.

By Julie Morse, Gabbitas independent education consultancy

L

et us set the scene. Your child has attended a well-known academic prep school since the age of four. It is traditional, structured and the children are regularly tested to assess their achievement. At parents’ evenings however, the teachers appear slightly concerned that your child is ‘struggling to grasp concepts’ in Maths or ‘finding it difficult to structure a story’ in English and a panic button within you is pressed.

Firstly, step back, breathe and get a real sense of where your child might be on the wider academic spectrum. It is important to remember that the teachers are measuring your child against a benchmark that is particular to their school and their pupils. Very few of us have a child that consistently ranks among the high achievers in every subject, but that does not necessarily mean that they will fail entrance exams! It is usually at this point that parents consider the idea of having their child tutored. A tutor who is experienced in teaching a range of abilities from an array of schools might put your mind at rest.

However, tutoring is not just about pushing a child through exams. The overtly academic environment of many prep schools can unwittingly chip away at a child’s self-esteem and some lessons do not always press the right buttons. In any school, but especially those that are highly academic, children can become easily demoralised; a tutor can help to restore a sense of self-worth and instil a ‘can-do’ attitude. Confidence is everything, especially when it comes to Maths. If it does appear that your child may need extra help in reaching the standard required for the school of your choice, it is never too late to begin. The appropriate person, with a sympathetic and stimulating approach, can make a life-changing difference to your child’s self-perception as a mathematician, scientist or writer.

Exam practice is vital to success in entrance exams so that candidates can experience exam conditions, time themselves and ensure that they have the correct equipment and techniques. This all serves to demystify the exam process and hence alleviate the associated anxiety. A good tutor will also have a raft of practice papers which are an excellent diagnostic tool and also help in pinpointing the appropriate schools for your child.

Most prep schools do vigilantly set about studying past papers, providing reasoning classes and teaching revision techniques. However, even if they do, it is impractical to provide practice for the full range of prospective schools when classes amount to15-20 pupils. Tutoring can make a huge difference between success and disappointment.

In my experience this is the common scenario in a school: the high achievers are flying, the children needing learning support are given that support, but the ones in the middle, who just need boosting, are not always given the necessary attention. Don’t get me wrong, as a teacher I know how hard teachers work to provide pupils with a vibrant, meaningful and effective education – but sometimes it’s just not quite enough. It may be that there are too many in the class and not enough hours in the day, but sadly, it is sometimes the case that a child is perceived as lazy or uncooperative, when actually there is an underlying problem to address. To draw up a specific individual education plan for each pupil is not financially possible

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guide to independent schools | the barrister 2010

or practical in most schools.

A tutor will provide this IEP. His or her raison d’être is to provide targets, incentives and achievements uniquely for your child; to focus on specific subjects or to help your child to hone study skills and revision techniques. If a vital stage or concept has been misunderstood and a child is floundering, just a handful of sessions from the right tutor can plug that gap. The focused one-to-one attention can help a child to get back on track and even find they develop a real enjoyment of a previously dreaded subject.

A tutor is also invaluable if you suspect that your child may have a specific learning difficulty. Many tutors have additional training in dyslexia, dyscalculia and processing disorders. They will know and understand that these disorders do not usually have a bearing on a child’s cognitive skills and IQ and will help them to develop strategies for coping and achieving in spite of their problems.

If you decide to employ a tutor, make it appear a positive step and involve your child in the process. Discuss the reasons why you think tutoring is a good idea without criticising their school, their teachers or indeed their own capabilities. Ask your child about their hopes for the next stage in their education. Children are sensitive creatures and the need for ‘extra help’ can easily be perceived as, ‘so you think I’m not clever enough!’ It is hard as a parent not to transfer your panic about the highly competitive system to your child. A small dose of urgency, a chat about working hard and having choices, that’s fine, but some parents tend to heap untold pressures on their children to ensure that they achieve parental aspirations. This is counter-productive and grossly unfair. The top ranking schools (depending of course on how your read the league tables) may promise everything that you have ever wanted for your child, but when your child reaches ten, do you still believe that this is the school for them?

A good, clear-sighted tutor will want to help a child to achieve his own potential and through the tutor’s experience of a range of entrance exams and a spectrum of children, they should be able to guide you and your child towards sensible choices of schools. A good tutor can help you assess whether a particular school is attainable. There are many excellent schools out there and one of them will prove to be a perfect match. Happiness is absolutely everything. If a child is not happy at school it will be an uphill struggle for him or her every day for years and years. Far better for a child’s self-esteem to be at the top of a slightly less selective school, than floundering in the bottom set of a school into which he or she has been squeezed.

A word of caution; some prep schools can be less than supportive about parental desire to tutor children outside of school. Perhaps they feel that outside tutoring undermines the effectiveness of their curriculum and lessons? Perhaps they worry that another approach will confuse an already bewildered child? Perhaps tutoring is confused with ‘hot-housing’ and seen as not in the child’s best interests?

Tutoring should not be about hot-housing. Tutoring should be about building confidence, developing skills and techniques, plugging gaps and moving forwards. Tutoring is about planning for the individual pupil’s needs, demystifying exams, relieving the anxiety of both pupil and parent, instilling a sense of achievement and as a result tutoring is about making considerable improvements to a child’s academic performance. This is self-perpetuating and children can grow hugely both emotionally and intellectually in a very short amount of time given the right building blocks.

Gabbitas Educational Consultants can recommend private tutors in London for all stages of education. Their tutors are qualified, full-time professionals with extensive subject knowledge and experience. All their tutors are interviewed and subject to careful screening before they are recommended to clients. Lessons are either held at the tutor’s home or some may travel to the student’s home if required. Their tutors cover all stages of education and a range of subjects including English, Maths, Science and languages.

They have particular expertise in the following areas:

When choosing a tutor:

Preparation for Common Entrance or other school entrance exams GCSE or A Level revision Support in specific subjects at school Study skills and exam techniques Degree level studies Coming to school in the UK from overseas English language tuition Special Needs support

• Find someone with whom your child will feel comfortable and can relate to • Pinpoint a tutor who is fully up-to-date with the entrance requirements and current exam content of your chosen schools.

• Ask your prospective tutor about their tutoring experience and ensure that you are satisfied by the response.

• Check their success rate of helping pupils pass exams and ask for references from recent students.

• If you do not have personal contacts and recommendations, an agency can provide a tutor. The agency will have interviewed tutors on your behalf to ensure that they are suitably qualified and will have pursued references.

They will also have insisted that the tutors all have an enhanced CRB check.

As long as your child can see the point, finds tutoring sessions worthwhile and effective and you can see positive results, you’ve achieved something both beneficial and rewarding.

P R I D E

O F

Founded in 1873, Gabbitas has an international reputation as one of the UK’s leading independent education consultancies. Offering expert, independent guidance on all stages of education, it receives thousands of enquiries each year and provides specific advice to parents and students from all over the world on the best independent education options in the UK.If you are interested in talking to Gabbitas about employing a tutor then please contact Gabbitas on 020 7734 0161 or e-mail info@gabbitas.co.uk

P L A C E

LYONSDOWN SCHOOL

South Oxfordshire

All Boys’ Catholic Boarding/Day School (11 to 18 years)

Independent day school for boys 3-7 years and girls 3 - 11 years

‘The school provides a well-rounded education and is successful in its aim of creating an environment in which the pupils thrive, are happy, confident, considerate of others and achieve well. Good quality teaching fosters an atmosphere in which pupils are well motivated, work hard, not only in academic lessons, but also in sports and extra curricular activities’ ISI Report – June 2008

OPEN AFTERNOON

Tuesday 15 June 2010 at 1.45pm For more information please contact the secretary.

‘Give your child the best start’ Telephone to be included on our Open Afternoon guest list

020 8449 0225

3 Richmond Road, New Barnet, Hertfordshire. EN5 1SA Email: enquiries@lyonsdownschool.co.uk Web: www.lyonsdownschool.co.uk

Top 20 Independent Boys’ Boarding Schools – Best Schools 2009 Top 30 Independent Boys’ Schools – Independent School of the Year for Sport – Daily Telegraph 2007

Open Mornings in May & October Weekly Show Rounds · Scholarships & Bursaries Available

01491 683500 · enquiries@oratory.co.uk · www.oratory.co.uk

guide to independent schools | the barrister 2010

9

Investment and tax planning for school and university fees Henrietta Banbury and Frank Akers-Douglas of Smith & Williamson provide key tips on financing private and university education

A

good education is an investment that can be made for a child’s permanent benefit, and it is important to understand that planning from the earliest stage is needed to ensure that any education programme is completed successfully. This article applies to those already with young children, those with children already in private education or indeed those who envisage that they would one day like their future children to be educated privately or attend university.

Saving should be started as soon as possible with such a long term project to complete. There may be 13 or more years of education to cover if university is also taken into account. If you are considering saving for an unborn child you should take advantage of the benefit of a further five years to build up a savings pot. Saving should be made as effective as possible so ISA allowances should be fully utilised by both parents – the full Stocks & Shares ISA allowance for 2010/11 is £10,200 for everyone over 18 years old, but partial subscriptions can be made as suits the individual, or indeed a £5,100 cash ISA is an alternative.

Cash ISAs can be converted to Stocks & Shares ISAs at a later date if desired. Never underestimate the power of compounding interest over time, so try to find an account which accrues interest as frequently as possible. Also bear in mind that a cash ISA allowance is available to any individual aged 16 years or more.

To help you achieve your goal, it is helpful to talk to an investment manager who can build a model to reflect your exact circumstances and allow for general and school/university fee inflation, asset returns and the number and ages of your children. The manager will then keep your portfolio asset allocation suitable for the task in hand. The allocation of your assets should be flexible as the life of the project progresses. In the early days before your child goes to school a higher percentage of the assets can be invested in growth assets such as equities, whilst as the project progresses along its time-line a greater degree should be matched to the end liability.

At any point in time the equity component should be matched to the longer term liabilities, whilst cash and bonds should be available for shorter term payments. Inflation is a key variable during the life of the project, and as such index-linked assets should be utilised for this liability matching. Whilst we are currently in a low inflation environment, it is a well known fact that school fee inflation has been constantly above the Retail Price Index for some time, and hence a combination of equities and index-linked investments should help you reach your goal, and the proportions in each managed carefully.

For those who are lucky enough to have a lump sum set aside, perhaps as a gift from grandparents or a family trust, many schools have started offering a “pay up-front” facility for parents so that they feel that the job is done and the worry over with. The model referred to above should be a key tool in assessing the worthiness of any such offer – it is more than likely that the school will come out the winner in any scenario and that

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guide to independent schools | the barrister 2010

you would be far better off keeping back the money and formulating a sensible investment plan over, say, a ten year period instead. Family situations do change and it can be a mistake to restrict your choices.

There is currently a significant difference between the tax rate of capital gains and that of income, with the former being just 18% in comparison with the 40% or 50% of earnings for the higher rate income tax payer. As a result there are some investment choices which can be made to help build up the savings efficiently and reduce taxable income. However, given the disparity between CGT and the higher rates of income tax, CGT may well be increased in the not too distant future, and it is right to bear this in mind when deciding an investment strategy.

These include¬ “Roll-up Funds” whereby capital gains tax is incurred on sale but all growth in the meantime is tax free. Similarly, investment trust zero dividend preference shares, or “zeros”, which offer a percentage return over a time frame but no income may also be worth considering.

As with any investment, there is risk attached, and any open ended investment company or investment trust is only as good as its manager and the quality of the underlying assets invested in. It is therefore important to get advice before buying any of these investments, particularly anything which appears to have a “guaranteed” return!

A common pitfall is to make such an investment and then not to be aware of changes in investment managers or investment strategy, so it is important that investments are closely followed, and an appointed investment manager would fulfil this task on your behalf.

Liquidity, ie the ability to access your money, also needs to be a key factor for consideration, as school fee payments will be a regular outgoing and you will need to be able to access your money as required.

A common pitfall is to invest in an asset which then takes three months to extract your money from, even though the initial purchase of the asset was instant!

Tax impact Tax considerations can have a major impact on the success of an investment strategy. For example, parents should aim to minimise their combined tax bills by making full use of their tax allowances and the lower tax bands. This may mean that it is more tax efficient for a lower or non-earning spouse to hold income-generating investments.

Remember that individuals can typically earn up to £6,475pa tax free and that the 40% rate of tax only applies to taxable income over £37,400pa (note once annual taxable income exceeds £100,000 higher tax rates will apply). It is also helpful that assets held by married couples (or civil partners) can be gifted from one to the other without incurring a CGT charge.

It may make sense to put some income-producing assets such as shares or cash deposits into your child’s name - however, as a parent you are taxed on the income from such investments if this exceeds £100pa.

On the other hand, if the asset is gifted by others (for example

grandparents), the child can receive income up to £6,475 per year taxfree, so this can be a very tax efficient arrangement. It may also result in inheritance tax (IHT) savings for grandparents.

In addition there is a valuable IHT relief for regular gifts made from normal income (ie not from capital). This means that if grandparents pay school fees on behalf of their grandchildren, or make regular gifts to the children in anticipation of school fees or other expenses, those payments would escape future IHT liability provided the grandparents are left with sufficient income to live on.

Also remember that anyone can give away up to £3,000 per year without giving rise to IHT. Such gifts could be made by grandparents or others to children with a view to it being used for their education.

may be appropriate for long-term investments but you will probably also need access to cash and bonds for shorter-term requirements.

• Consider ISAs for those over the age of 16 and other tax-free accounts.

• Take advantage of capital gains allowances, currently £10,100 per person per year, irrespective of age.

• A child can earn tax-free income from assets gifted by non-parents.

• Be sure to organise a tax-efficient arrangement of assets bearing in mind parents’ income levels so as to minimise income tax.

• Discuss with grandparents the possibility of them helping to pay school fees.

• Where Child Trust Fund accounts are open, consider making the maximum annual contribution (currently £1,200) to the account. The funds within the Child Trust Fund will generally be available to the child when they reach 18 years of age.

For further information, contact:

It’s also worth noting that everyone, whatever age, has an annual tax-free capital gains allowance, currently of £10,100. Even if you, as a parent, gift or buy assets in your child’s name, which aim to generate capital gains rather than income, the child could sell them, making a capital gain each year of up to £10,100 without incurring tax on those gains. The key is to plan ahead and be aware if both investment and tax issues!

Henrietta Banbury, investment manager, or Frank Akers-Douglas, private client tax director, both at Smith & Williamson the accountancy and investment management group

Smith & Williamson’s top financial tips to help parents funding school fees or university costs:

Kate Harrison/ Jess Koslow 020 7131 4228/ 4264

• Start saving as early as possible • When investing for future education plans, consider the time-frame and also that you will need to have regular access to the funds. Equities

Tel: 020 7131 4000 henrietta.banbury@smith.williamson.co.uk frank.akers-douglas@smith.williamson.co.uk

PR enquiries to Disclaimer By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

Roedean Barrister Details correct at time of writing.Quarter:2043 10/5/10 12:58 Page 1

FLAIR • DISCIPLINE • ACADEMIC RIGOUR T: +44 (0)1273 667500 E: info@roedean.co.uk www.roedean.co.uk

An independent day and boarding school for girls aged 11 to 18 in Brighton REGI

BROMSGROVE SCHOOL

REGI

FOUNDED 1553

Bromsgrove School offers academic excellence coupled with a wealth of sporting and extra-curricular opportunities.

International Baccalaureate and A levels offered.

The Good Schools Guide says:“Bromsgrove inhabits the academic stratosphere” and “Bromsgrove sport is outstanding” 220 pupils aged 3 - 7, 470 pupils aged 7 13, 850 pupils aged 13 - 18

Telephone: 01527 579679 email: admissions@bromsgrove-school.co.uk

www.bromsgrove-school.co.uk

‘An exciting school, where students are going places with a spring in their step and a smile on their faces.’

Good Schools Guide

guide to independent schools | the barrister 2010

11

The Merits of an Independent Education

By David Lyscom, chief executive, Independent Schools Council

T

he Independent Schools Council (ISC) represents some 1300

Partnerships

independent schools in the UK and overseas, and parents can

Engaging with society and contributing to local communities is

be confident that each one of them is committed to providing

something our schools do as a matter of course. Increasingly, they

a world-class standard of education. And it is not just those in the

undertake partnerships with schools in the maintained sector by

independent education sector that say so. According to OECD PISA

collaborating and sharing their facilities. Whether it is the kind of

studies, UK independent schools are among the best in the world

specialist sporting equipment that youngsters from the maintained

at developing their pupils’ skills in areas such as sciences, maths and

sector might otherwise not have access to, or the advanced teaching

reading. In the most recent PISA survey of 15-year-olds, our independent

provided in Saturday morning classes, sharing is a key part of

school pupils were ranked in the top three for all subjects. The reason

the independent ethos. They benefit schools and pupils from the

for the continued success can be attributed in no small part to the

maintained sector while contributing to the broader education of

freedom enjoyed by independent school head teachers and governing

independent school children – a clear win-win situation. They help

bodies to tailor teaching, the curriculum and facilities to the needs of

develop a greater understanding of society in its widest sense and they

the individual pupil, rather than to a blueprint imposed from outside.

provide valuable lessons for our pupils, which they carry through their lives.

Academic Excellence The high standard of teaching in our schools, clearly reflected in the

Special Educational Needs

grades that they post year after year, is one of the main reasons for

Although noted for a tradition of scholarship, independent schools are

parents continuing to choose an independent education for their

not the preserve of the brightest or most gifted children. Across the

children. Aligned to this there are the pupil-teacher ratios, which

sector as a whole, our schools educate children of all abilities to make

continue to fall in ISC schools, and the array of choices in curricula

the most of their talents. All of our schools, including the less academic,

and qualifications, which can be individually-tailored to pupils’ needs.

non-selective schools, attain impressive results for their pupils. ISC

A number of ISC schools offer the International Baccalaureate, for

believes that all children should have a right to receive an education

example, which encourages active learning in pupils. Then there is the

that meets their needs and enables them to develop their full potential.

International GCSE, an increasingly popular alternative in our schools

At present, nationally, the prospects for many children with special

to the traditional GCSE. These are much more compatible with curricula

educational needs are variable. In practice, provision in schools tends to

abroad and have been heralded as a return to the ‘end of year exam’

be rationed and governed not by need but by funding considerations.

model of the old GCSE. Thanks to the flexibility of not being tied to the

This can store up problems for many such children in the future. It also

national curriculum or local authorities, ISC schools were also some of

represents a huge waste of potential talent. With proper support, these

the first to adopt the Pre-U exam, a course for pupils aged 16 and above

children achieve leading roles in many fields, including business and

which is designed to prepare them for university.

entrepreneurship, the creative and performing arts, sport and research.

This is something independent schools are acutely aware of, which

Broad Curriculum

is why so many offer such a wide provision of facilities for those with

As widely-respected as the independent sector is for its examination

special educational needs.

success, its commitment to breadth is its hallmark. ISC schools stimulate curiosity, experimentation and a healthy approach to risk, while

Sporting success

promoting general skills such as teamwork, self-sufficiency, lateral

Independent schools are committed to providing children with a

thinking and intellectual rigour. A broad curriculum together with a

rounded education offering ample opportunity for both sporting and

multitude of opportunities for personal development through extra-

academic challenges, and along with modern academic facilities such

curricular activities and leadership roles are vital elements in producing

as ICT centres, science laboratories and state of the art classrooms,

well-rounded, mature adults, able to cope with society’s pressures and

schools invest significantly in sporting facilities. Athletics, rugby, football,

contribute to the common good. This is increasingly important as

squash, tennis and

universities and employers struggle to distinguish between candidates

lacrosse are just a

with the same high academic qualifications.

small

12

guide to independent schools | the barrister 2010

selection

of

The articles in this supplement are intended for general information only and should not be construed as advice under the Financial Services and Markets Act

the activities independent schools offer. Indeed many ISC schools

before you buy,” with schools ever eager to throw open their doors for

have produced some of the best sportsmen and women in recent

parents. Schools are becoming ever more flexible when it comes to

memory. The 2008 Beijing Olympics was dominated by independent

open days, and prospective pupils and parents are now often invited

school educated stars such as Chris Hoy and Ben Ainslie. The England

to interactive classroom sessions, school tours, music evenings, and

rugby team also boasts a hoard of independent school alumni, Jonny

lunch with the head, as well as a host of activities designed to show the

Wilkinson, Matthew Tait and Lewis Moody to name but a few.

school at its best. Many schools will also allow current pupils to give

Extra-curricular

tours around the facilities. They are a great advert for any school and will give honest and frank answers to any questions you might have.

Children learn about leadership and team work in our schools, and this is never more evident than in the various initiatives offered, such as

Affordability

the Duke of Edinburgh’s Award scheme and Combined Cadet Forces.

It is an oft-repeated claim that independent schools are financially out

The school day doesn’t have to begin at nine and end at five, and many

of reach to all but a wealthy few. This is a myth. Fees in ISC schools start

parents choose a weekly or flexible boarding option, allowing their

as low as £5,000 per year, with the average day fee still below £10,000.

children to take full advantage of the after-school activities that are

More than one in three pupils at ISC schools receives assistance with

on offer. Students are not confined to the school premises either as

fee costs, with four out of five of these awards coming directly from

schools are very keen to organise trips abroad for history, geography

the school itself. Most ISC schools offer bursaries, scholarships or both.

and modern foreign language purposes. The average school newsletter

The ISC website - www.isc.co.uk - is a great resource for information on

will invariably include details of groups of students trekking off to some

independent schools in the UK. As well as providing practical advice

far flung destination.

on financial assistance, the website will give a flavour of the enormous diversity and quality of resources our schools have to offer.

Open days When it comes to choosing schools, there is a strong emphasis on “try

Located in the heart of the city, we offer boys a outward-looking, forward-thinking education that prepares them for life.

Academic, Music and Sport scholarships are available at 11+, 13+ and 16+.

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guide to independent schools | the barrister 2010

13

Clever ways to fund school fees

By Jason Butler, Chartered Financial Planner

r ways to fund school fees or many parents, providing their children with a good education

F

There are three considerations to saving in advance:

commitment and could well equate to over £300,000 (about £250,000

National Savings;

is an important priority which is seen as a good ‘investment’. In Butler, Chartered Financial Planner some cases parents view funding school fees as a more practical

Saving in advance •

Time horizon – the time between saving and meeting the fees

arents, providing their children with a good education is an important priority which is and positive method of transferring wealth to the next generation than will dictate whether you can afford to take any risk with your money. ood ‘investment’. In some cases parents view funding school fees as a more practical and giving them money either during their lifetime or on death.

Generally if fees are required within the next 8-10 years then you will ethod of transferring wealth to the next generation than giving them money either during Funding a private education, however, is not an insignificant probably have to stick with cash or other defensive holdings such as me or on death.

in present value terms) based on a cost of £5,000 per term. University private education, however, is not an insignificant commitment and could well equate to fees and costs will add another £45,000 to that total cost. In addition, • 000 (about £250,000 in present value terms) based on a cost of £5,000 per term.

Tax position – minimising the tax incurred on savings and ees and costs will add another £45,000 to that total cost. In addition, school fees school fees inflation continues to be well above price inflation, with investment returns is obviously desirable. If you are holding savings ntinues to be well above price inflation, with latest figures from the Independent Schools latest figures from the Independent Schools Council (ISC) showing this in interest-producing assets then ensure these are held within an C) showing this to be 5.9% in 2009. to be 5.9% in 2009. individual savings account (ISA), by a lower rate or non tax-paying spouse, in an offshore investment bond (if the amount is large enough and the charges are reasonable) or possibly within your pension (assuming that you will be able to draw on them in the required timescale). For risky assets which generate mainly capital gains, these might be taxed at zero or 18% depending on whether you utilise your capital gains tax exemption (currently £10,100). There are also a number of lower risk investment vehicles which provide returns as capital gains rather than income, and with income tax rates at 50% or even 60% (the effective rate for those with income between £100,000 and £112,950) this can make a real difference in some situations.

School fees inflation 1999-2009 School fees inflation 1999-2009 Source: Independent Schools Council Source: Independent Schools Council

magic to funding school fees and there are essentially three basic options: There is no magic to funding school fees and there are essentially three

•

Risk and return are related – the higher the investment return

you need then the higher the risk to capital and variability of returns you will have to accept. Although cash and National Savings products

e before you incur the fees and hope that investment returns at least preserve the real are exposed to inflation risk (and if more than £50,000 is held with one, basic options: ue of the capital relative to the fees; the risk of the financial institution failing), equity, property and other 1)

Save before you incur the fees and hope that investment

risky assets have a higher return expectation precisely because there

returns at least preserve the real value of the capital relative to the fees; y as you go from earned or passive income (which for 50% income taxpayers means 2) Pay as you go from earned or passive income (which for 50% is more risk involved. Far from trying to avoid risk, investors should ning twice the amount of the school fees); or income taxpayers means earning twice the amount of the school fees);

recognise that the risk is in fact the source of those higher returns.

alising funds from existing assets (including borrowing against property), selling existing Don’t believe anyone who tells you it is possible to have high returns or estments or accessing pension funds. without risk – if it looks too good to be true then it probably is! As a 3)

Realising funds from existing assets (including borrowing

ep should be to minimise the fee liability. One route is to pay for private tuition to help against property), selling existing investments or accessing pension rough guide, a portfolio of low cost index funds, split 60% to risky assets and 40% to defensive assets has a reasonable chance of producing a o achieve high marks in the entrance examinations and thereby hopefully obtain a funds. to obtain discounted (or nil) fees. The other route is to see what discount the school The first step should be to minimise the fee liability. One route is to real long term annual return, net of costs, of between 2and 2.5%. ider for pre‐payment of some or all the fees, assuming of course that you have funds

GM

pay for private tuition to help your child to achieve high marks in the entrance examinations and thereby hopefully obtain a scholarship to

With recent rises in income tax and restrictions on pension

obtain discounted (or nil) fees. The other route is to see what discount

contributions, investment-linked life insurance based savings policies,

the school might consider for pre-payment of some or all the fees, known as maximum investment plans (MIPs) have re-surfaced. In azine Bloomsbury Financial Planning April 2010 assuming of course that you have funds available. Some schools offer

return for regular monthly or yearly contributions into a life assurance

monthly instalment plans to help spread the cost over the year, but this

policy (which has a very small amount of life cover: not less than 75%

is not the norm.

of the premiums due over the term) for a term of at least 10 years,

14

guide to independent schools | the barrister 2010

Page 1

investment growth is taxed within the policy at the life company rate of 15-20%. As long as contributions are paid for at least three quarters of the policy term (7½ years for a 10-year policy) then any proceeds are free of further tax. However, unless you use your ISA subscription and CGT exemption in full each year, these policies are unlikely to be tax attractive and they are quite rigid in terms of investment flexibility.

The latest generation of planned exit venture capital trusts (VCTs) and enterprise investment schemes (EISs) aim to return the gross capital invested after five and three years respectively by investing in very short cycle cash-backed trades such as ticket sales etc.. The return is provided by initial income tax relief of 30% for VCT and 20% for EIS, equivalent to an annual return of well over 7%. This might offer a useful alternative either to repaying debt or opting for more risky and uncertain stockmarket-based investments, providing that the minimum term fits with when fees become due.

Pay as you go If you intend to fund some or all of the fees from earned or passive income as they are incurred, then your key objective must be to minimise tax arising on that income. In the case of passive income it will be impacted by whether it is classed as savings or investment income.

Minimise tax on passive income - hold cash and/or high incomeproducing investments within your ISA (maximum subscription is currently £10,200 per tax year). If you are married or in a civil partnership, it makes sense for the partner subject to the lower rate of tax to hold any excess cash or income-producing investments.

Child owning shares in a family business – although barristers are self-employed, if they also have family business interests, then this idea might be useful. The principle is that dividends arising from the business meet the school fees and as long as these are within the child’s basic rate income tax band, then no further tax will be due (other than corporation tax on business profits). In order for this strategy to be viable the child must purchase the shares from funds provided by someone other than the parent (e.g. grandparents etc.) or, better still, the child obtains the shares in a new company when they have negligible value.

Employing the child – after a young person finishes A levels they can be employed under a full time contact of employment and upon commencing university or college they can continue to be paid up to £15,480 p.a. tax-free, with the payments deductible from business profits. The only drawback is that such payments may reduce eligibility for student loans and grants.

Realising funds from assets Sometimes earned income and/or dedicated fees savings are insufficient to meet fees. In these situations a more creative approach may be required. The following is a summary of planning ideas that could be useful to bridge any funding gap that might arise.

Mortgage funding – where the value of your home has increased significantly or your mortgage has been repaid or reduced to create meaningful equity, then it should be possible to arrange a flexible mortgage facility to about 70% of the property’s value. The mortgage can then be drawn down as required to meet fees, thus only incurring interest on the amount drawn down. It is important to ensure that, where possible, the loan is structured so that it qualifies for the maximum deduction from business profits and not directly linked to school fees. There are clear rules governing deductible loan interest but as long as you qualify, you’ll halve the cost of your borrowing if you pay 50% income tax. Notwithstanding interest rates, the loan will need to be repaid either from the proceeds of selling the property and/or from other investments or the tax-free lump sum from pension funds.

Sell assets to your pension – if you own an asset which you wish to retain, such as commercial property or investments, and have cash or poor investments in your pension which you’d like to access to meet school fees, then it is possible to sell the asset to your pension fund in return for the cash. Although selling the asset to the pension fund will be a crystallisation point for capital gains tax and in the case of property will incur stamp duty land tax, it might offer a genuine solution to meeting fee funding, without disposing of good assets.

Pension tax-free cash – the earliest age at which you may take benefit from a pension is now 55, unless due to permanent ill health. Up to 25% of the fund may be taken as tax-free cash, unless you benefit from a protected tax-free cash entitlement of a higher amount as at 6th April 2006. If you are aged 55 you can take tax-free cash in stages over several years, with no requirement to buy an annuity or take income from the fund until age 75. This allows flexible access to tax-free amounts that can be used to meet fees.

There is no one size fits all solution when planning for school fees.

What is needed instead is a comprehensive approach to planning your overall financial affairs which balances a range of competing priorities.

Jason Butler is a Chartered Financial Planner and Investment Manager at City based Bloomsbury Financial Planning. He has twenty years’ experience in advising successful individuals and their families on wealth management strategies.

Jason can be contacted on email: jasonbutler@bloomsburyfp.co.uk

Consider incorporating some of your business – some of the more creative tax planners advocate directing some business profits into a limited company structure so that more advanced tax planning can be used to extract the resulting profits so sheltered. If structured correctly, this has the potential to open up a lot of legitimate income tax mitigation solutions which are beyond the scope of this article.

Tel: 020 7194 7830

guide to independent schools | the barrister 2010

15

Funding for school fees

By Anne Gregory, director, Haysmacyntyre tax advisors

T

he cost of private education is a major item in parents’ financial planning. With average fees at just under £4,000 per term (or £7,000 per term for boarders)* and increasing at around 5% per annum*, the cost for secondary education can easily reach £100,000 per child. This is not an easy figure to raise and, in practice, funding usually comes from a number of sources: • Direct funding from current income • Funding Savingsfor and investments school fees • Funding from grandparents, trusts or scholarships Anne Gregory, director, tax sources advisors This article concentrates onHaysmacyntyre the second of these and gives details of the available choices.

The required return will determine the level of risk that needs to be taken and, clearly the parents need to be comfortable with that degree of risk.

The degree of risk will determine the type of investment. If an inflation rate of around 2-3% is implied by the figures above, a return of 6% per annum is only likely to be achieved by investment in real assets – eg. property and equities. If a return of 3 or 4% would be sufficient to meet the fees, cash deposits or fixed interest investments could be considered. In practice it is likely to be a combination of all these asset classes with the weighting being determined by the required return.

The cost of private education is a major item in parents’ financial planning.

With average Where to invest – short term fees at just under £4,000 per term (or £7,000 per term for boarders)* and at around 5%isper The increasing question of where to invest determined not only by investment Financial planning annum*, the for cost forone secondary education reach per the child.

This is not an easy risk but also term for investment.

Those savings that are to be used When funding fees needs to separate the can shorteasily term from the£100,000 figure toterm raise and, and in practice, funding usuallythat comes of sources: in the short term, ie. less than five years, should go into low risk assets. medium funding to put together a portfolio coversfrom both.a number Ideally funding should start at birth when all the funding is likely to be These would include cash deposits with banks or building societies, • Directinfunding from current income for expenditure 5 years or more (medium term). In practice this is not government stocks (Gilts) or National Savings.

• Savings and investments always possible.

• Funding from grandparents, trusts or scholarships For cash deposits the choice is between instant access accounts or In most cases some funding from current income will be required so the term deposits. Clearly access is the predominant factor. At the moment This article concentrates on the second of these sources and gives details of the available ability to set aside savings from income is highest before the first child interest rates are at an historic low and are only likely to go up from choices. goes to school and becomes progressively more difficult as children here. If the rate offered for a 12 month term deposit is similar to that start at school and some of that surplus income that was going into offered on an instant access account, the latter may be preferred since Financial planning the variable rate offered may increase during the next 12 months. savings is now needed to pay current fees.

When funding for fees one needs to separate the short term from the medium term funding and to

National Savings investments can be timed to mature when For assumethat there is surplus £15,000should per Gilts put example, togetherifawe portfolio covers both.income Ideallyoffunding startand at birth when all the funding is fees are due.

Generally returns from these investments are tax free. annum and two children, currently aged 6 and 4 to educate from age likely to be for expenditure in 5 years or more (medium term). In practice this is not always 11 and that surplus income and fees both escalate by 5% per annum possible.

If you know which school the child will be attending, enquire about and savings grow by 6% per annum, the plan would look like this: theso school’s pre-payment These will offer a discount for early In most cases some funding from current income will be required the ability to set schemes. aside savings of fees and the ratemore of discount should be compared with the Where should the savings before go? from income is highest the first child goes to school andpayment becomes progressively difficult as children startrequired at school and some of outlined that surplus that net wasofgoing into savings is expected tax return from alternative investments. You should This depends on the return to meet the plan above.income now paywill current fees. funds left on the children’s 18th also check the position in the event that the child does not go to that In thisneeded example to there be sufficient birthdays to fund University education but a return of 6% net of tax school.

Forbe example, we assume surplus income of £15,000 per annum and two children, will required.ifDifferent levels there of feesisand savings and numbers of currently aged andwill 4 produce to educate fromresults. age 11 and that surplus income and fees both escalate by children and their 6ages different

5% per annum and savings grow by 6% per annum, the plan would look like this:

Year 1 2 3 4 5 6 7 8 9 10 11 12 13

Savings £15,000 £15,750 £16,538 £17,364 £18,233 £19,144 £20,101 £21,107 £22,162 £23,270 £24,433 £25,655 £26,938

Fees - Child 1

£15,300 £16,065 £16,868 £17,712 £18,597 £19,527 £20,503

Where should the savings go?

16

guide to independent schools | the barrister 2010

Fees - Child 2

£15,300 £16,065 £16,868 £17,712 £18,597 £19,527 £20,503

Surplus savings £15,000 £15,750 £16,538 £17,364 £2,933 £3,079 -£12,067 -£12,670 -£13,304 -£13,969 -£14,667 £6,128 £6,434

Accumulated savings £15,000 £31,650 £50,087 £70,456 £77,616 £85,352 £78,407 £70,441 £61,364 £51,077 £39,474 £47,970 £57,283

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17

Where to invest – medium term In the early years (particularly in the above example) the savings could be medium to long term since they could be invested for more than 5 years. The money put away in the first 3 years in this example should not need to be touched until year 8.

The plan is technically an investment in a life assurance policy but with the emphasis on maximising investment returns. As a life policy the plan enjoys a favoured tax environment with income and capital gains taxed at no more than 20%. There is no need to declare the investment returns while these are building up in the plan.

For medium term investment, depending on the parents’ attitude to risk, other asset classes such as property and equities could be considered. These asset classes would be expected to produce a higher return but are more volatile.

Generally it would be advisable to diversify savings as far as possible and so access to these asset classes would most likely be via unit trusts or investment trusts. Exchange Traded Funds (ETFs) have also become very popular in recent years because of their low costs. ETFs link investment returns to an index such as the FTSE 100 Share Index.

If the plan is encashed within the first 7.5 years and you are then a higher rate taxpayer, tax will be payable on the profit at the difference between your highest rate of tax and the basic rate. If savings have been made for 7.5 years or more, there will be no further tax liability on the profit realised. If regular savings are continued for 10 years or more, the plan can be used to provide a regular income with no further liability to tax.

Tax wrappers Having decided on the asset classes into which school fee funds are to be saved, it is then important to look at tax wrappers that might be utilised to reduce tax and improve the investment returns. The most obvious wrapper to look at is ISAs. ISAs In the example given above all the amounts being saved each year are within the new ISA limits for a couple – ie £10,200 each. The savings in the first 3 years could go into stocks and shares ISAs using unit trusts, investment trusts or ETFs. No Cash ISAs would be necessary as this money shouldn’t need to be touched for 6 or 7 years after its investment.

In years 4 to 6 it would be appropriate to put the maximum into Cash ISAs (£5,100 each) with the balance of the year 4 savings in stocks and shares ISAs. In years 7 and 8, the cash ISAs could be drawn down with the stocks and shares ISAs being used for the balance after that.

The benefits of the ISA are freedom from tax on income and capital gains generated within the fund. They are available to any UK resident over age 18 and are open ended – ie. they can be encashed at any time.

If ISA savings are already earmarked elsewhere, or insufficient to cover the anticipated fees, Maximum Investment Plans might be considered for fees due more that 7.5 years hence.

Maximum Investment Plans The introduction of a 50% tax rate is likely to rekindle interest in these schemes.

These are medium term regular savings plans designed to protect investment returns from higher rate tax. The features are: • Regular monthly or annual savings • No minimum term • Investment in a choice of asset classes including cash, fixed

interest, property and equities • Underlying returns taxed at no more than 20% • No further tax to pay on withdrawals after 7.5 years • The option of tax free income after 10 years • Valuable life assurance cover in the early years to protect

your anticipated savings

18

guide to independent schools | the barrister 2010

Life cover will be equal to 7.5 times the regular annual saving or the value of the accumulated funds whichever is greater and assumes acceptance at normal terms.

These plans can be funded from income or capital. In the case of capital funding they can convert fully taxed investment income into income taxed at only the lower rate.

Summary It is advisable to begin the process by putting together a plan such as that outlined above. This will enable you to determine how much needs to be saved and will give an idea of where savings should go. The plan will then need to be monitored on an annual basis to check the assumptions about the savings made, the rate of increase in fees and returns from investment The above investment comments are only a broad outline and you should consult an independent financial adviser for detailed recommendations.

* Source: Independent Schools Council

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