The increasing cost of funding children through university or private school, or just trying to give them a head start in life, can be a significant cost for families.
If you’re paying for tuition fees, accommodation and living expenses from income which has been subject to tax and national insurance, a significant amount of gross income is needed to meet such costs. Many opportunities are available to help reduce these costs by giving children an income to utilise their own personal allowances and basic rate tax bands.
Additional opportunities, not available to parents, can provide tax advantages for grandparents funding grandchildren under the age of 18. Structuring gifts in the correct way can also benefit your own inheritance tax planning.
Where there is doubt over whether your child is ready for the responsibility of direct ownership of income producing assets such as shares, trusts can be used to hold the assets, over which the parent, as trustee, can retain control.
The potential tax savings make it worth exploring what might help support your children or grandchildren get the head start they need. RSM can help you identify the right options, specific to your family circumstances.