School Fee Plan – Which One Should you Choose for your child?

By | Last Updated: 14th September 2019 | This post may contain Affiliate Links

Want to find out more information regarding School Fee Plans in the United Kingdom? School Fee Plans are designed to assist parents and legal guardians with school fees.

Typically, they can be ‘tailored’ to your individual requirements and circumstances, they normally offer some form of protection for your investment too!

The UK has some of the finest independent schools in the world, it’s natural for a parent to want the best for their child. After all, getting the right type of education can easily open doors in the future. Whether that’s to further education, employment opportunities and more! There’s a few schemes available under the current School Fee Plan model, let’s take a look in more detail!

How do School Fee Plans work in the UK?

British School Fee Plans can be a great investment should your situation warrant the use of them, normally they’re a good way to save and are typically ‘tax-efficient’. In most cases, parents and guardians use the schemes for schools, colleges and university fees, however sometimes they can be used for other things too.

The three main schemes are:

  • Income or Regular Saving Schemes – With this type of scheme you’ll normally make regular monthly or yearly payments. This means the earlier you invest, such as when your baby is born, or even before, the more ‘chance’ you’ll have that the investment will be a success.

  • Capital Schemes – Normally you’ll need to invest a ‘lump sum’ in a guaranteed fund, this tends to mean you’ll at least ‘get back’, the amount of your original investment. Remember though, not all plans will have a guarantee, some don’t. You need to read all the terms and conditions to make 100% sure.

  • Combined Schemes – As the name suggests, this combines the two schemes above. You firstly commit to investing a lump sum, then top this up on a monthly or yearly basis with additional payments.

Remember some of these schemes may include additional charges, such as an opening fee, annual management fees and so on. In some cases, depending on which provider you select, they may even take a ‘percentage’ of the profits. Additional charges, profit shares and more don’t apply to ALL providers, so read the documentation carefully.

Understanding the Tax Implementations

In most cases, school fee plans are designed to be ‘tax efficient’. Usually how much tax you’ll need to pay, will be dependant on the type of scheme you choose and your individual circumstances. Some people may pay more tax than others.

Equally depending on your situation, you’ll probably need to inform HMRC should your investment be a success, there could be income tax to be paid. If you’re unsure about your tax requirements, please speak to a professional adviser or accountant.

What happens if something goes wrong?

Most reputable school fee providers are regulated by the Financial Conduct Authority. If you’re unhappy with the service you’ve receive, you should speak to your provider directly to try and sort the issue out.

In ‘most cases’, any issues or problems will be concluded to a satisfactory result, however if you’re unhappy with your provider, you can normally make a complaint by referring the matter to the Financial ombudsman.

Like most investments, there’s risks and rewards, there’s no ‘guarantee’ that the investment will go up. Remember it can also go down, and you may get ‘back’ less than you invested.

Of course, it goes without saying, only an independent financial consultant can truly assess your personal requirements. What may be ‘correct’ for some people, might not be correct for others.

You should always make sure, you’re ‘comfortable’ with the risks before you do anything. If you’re unsure about what scheme is right for your situation, please seek professional advice before signing up. This website is to be used as a ‘general guide only’ and does not replace or constitute financial advice.