10 news/legal expert
Tax tips to reduce the cost of your children’s education
Good education is increasingly seen as a key element to securing a career and to progress in life, and we all want to achieve the best for our children, says Claudia Roberts, partner solicitor and chartered tax adviser at Glanvilles
Accordingly, a growing number of people look at the possibility of providing private education for their children or at least providing means for them to go to University without a huge debt around their necks at the end of it. At the same time the cost of private and university education is increasing year on year and finding means of funding is becoming significantly more difficult.
To pay for a single child’s education from pre-school to a post graduate degree will cost in the region of £250,000 to £350,000 depending on location. This is of course net of income tax. For a higher-rate taxpayer this would equate to around £420,000 to £585,000 of gross
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earnings. Therefore, in order to maximise available funds careful consideration should be given to funding any private or university education in the most tax efficient manner.
For older parents, or in respect of university fees, it may be appropriate to utilise the tax- free pension lump sum which, under the new pension freedom announced in the last Budget, can be withdrawn by anyone over the age of 55. Such funds will have had the benefit of 100% tax relief. Equally under the new regime, saving into pensions could also be an attractive means of providing a tax-free cash lump sum at a later date to pay off a loan or mortgage taken out to fund education or to
replace diminished cash reserves, for younger parents. For every £10,000 paid into a pension, £4,000 of tax relief is granted. ISAs and offshore bonds can also provide opportunities for tax-free growth and assist in maximising available cash.
Help from grandparents is probably the most tax efficient way to fund a child’s education if this can be afforded. By way of example: higher-rate taxpaying parents pay for a child’s education which, net of tax, costs £100,000. The parents would have to earn almost £160,000 gross to pay the fees due. If grandparents had capital/savings of £100,000 (which would become subject to inheritance tax) then such
would reduce to £60,000 on death. In total over £100,000 would be lost to the coffers at HMRC. If instead the grandparents used their capital/savings to pay for the education of their grandchildren then inheritance tax on this sum could be avoided. The parents could then use their earnings for pension investments and claim 100% tax relief. Overall the family would save over £100,000 of tax. The best way to achieve this would be for the grandparents to set up an educational trust fund at an early stage. Such a trust can be started with a lump sum or smaller payments over a term of years.
For more information on educational trusts or tax planning contact Claudia Roberts on the details below.
Details: 01983-527878
claudia.roberts@
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Is law headed for the cloud?
A leading South Coast law firm has put itself at the cutting edge of the profession by becoming one of the first to switch its systems to a secure cloud-based IT service.
Coffin Mew has signed a six-figure, three-year deal with Taylor Made Computer Solutions for its fully- hosted managed services solution.
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Until recently it has been rare for law firms to adopt cloud- based systems because they hold sensitive client data – and there are stringent guidelines designed to ensure security and compliance within the legal profession. However, Taylor Made’s cloud-based services offer watertight security and high levels of service to the users that meet the requirements of the Solicitors Regulation Authority (SRA).
The first stage of the installation went live last month when Coffin Mew’s systems were, smoothly and without any end-user downtime, switched over to the new hosted platform. Taylor Made is now responsible for the management and upgrade of the system and full
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delivery of IT services to support Coffin Mew’s ambitious growth plans.
The ’cloud’ delivery model is deployed by Taylor Made for dozens of its clients as it is highly flexible and provides for price-per- head payments that adapt over the life of the contract in line with staff numbers.
Tim Walker, managing director at Taylor Made Computer Solutions, based in Fareham, said: “We have been working with Coffin Mew for over 14 years, giving them strategic IT advice and on-site support in the firm’s three offices.
“Now they have switched to the cloud-based model which is a highly-efficient, cost-effective and low-risk solution. All the systems can be managed centrally, ensuring they are always up to date and that any problems can be dealt with quickly and seamlessly supported by robust data back-up capabilities.
“In many ways Coffin Mew is at the cutting edge by becoming one of the first law firms to move over to a fully-managed cloud-based service.“
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – FEBRUARY 2015
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