University Fees Planning

TAP INTO TAX Iss. 1

The purpose of this series of blogs is to highlight innovative tax planning ideas, which you can ‘TAP’ into; we hope you find them useful.

It has been widely reported in the press that UK Universities will now charge tuition fees of up to £9,000 per annum from the 2011/12 academic year.

Many parents (or grandparents) will want to assist their children to meet these high costs, ensuring they do not start their working life burdened with large five figure debts. If the £9K fees were paid from taxed income of the parents, gross income of over £18K would be required for a 50% taxpayer!

There are tax efficient planning opportunities available for parents whose children might not be going to University for some time – but who want to start preparing for the event now.

In addition, if your adult children are about to start University there are tax efficient opportunities to structure how the fees are paid.

Parents or grandparents could begin to save towards this substantial liability by putting funds or assets into trust while the children are still very young, there is the potential to mitigate the exposure to tax down to just 20% or less, reducing the overall cost of providing the £9K required to just £11,250 or lower and potentially spreading that cost over a much longer time span.

This planning can be even more effective in cases where the parents own a private company and would be prepared to settle some of the shares into trust. After the children reach, 18 this structure can allow for dividends paid on the shares to finance the university education tax-free in the hands of the children. *

If you would like to discuss University Fee Planning ideas please contact us.

*This planning can be used as a tax efficient method to pass income down to adult children generally.