Legal News | 26.10.23
The cost of a good education: on the up?
With a general election likely to be called before the end of 2024, the Labour party’s manifesto pledge to add VAT to independent school fees within one year of election is an ever-approaching concern for those with children at fee paying schools.
According to the Independent Schools Commission, for the fourteen years that a child can spend at a day school between Reception and Year 13, the average cost is £231,228. With the additional 20%, this will rise to an average of £277,474.
For boarding schools, the figures increase from £518,448 to £622,137 for the fourteen year attendance period. An increase of £103,689.
So, what can you and your family do to plan ahead?
- If you have relatives that you’d like to help with the cost of school fees, you may want to consider setting aside capital for this purpose, either during your lifetime or as a legacy in your Will.
- If your finances allow, you could look at whether you could part-fund your relatives’ school fees via gifts from surplus income. There are IHT benefits to this option but, to ensure your estate can benefit from these, very precise records of such gifts would need to be maintained.
- If you own shares in a family company, you could elect to set up a trust into which you could transfer the benefit of these shares, so that future dividends could be used to fund school fees.
- Finally, if the school offers the option, and funds allow – which may not be the case for many – you may be able to prepay school fees via a Fees in Advance scheme. If the fees are paid over to the school in advance of the VAT exemption being removed it may be possible to avoid the VAT charge.
It’s yet to be seen how schools will pass the additional costs onto parents if Labour do win the next general election, but we can be certain that parents will see an increase and this may have a significant impact for many.