Financial planning for private education and beyond

The idea

Faced with the increasing cost of private education – now subject to 20% VAT¹ – one couple needed to know: “can we afford to give our children the best opportunities without jeopardising our own financial future?”

They had always planned to send their children to independent schools, but new tax changes and escalating fees made them question whether that vision was still financially viable.

Both were in stable professional careers, with growing pension pots and a mix of cash savings and investments. But they also had a mortgage to consider, rising household costs, and a desire to retire early. They weren’t just asking: “can we afford it now?” They were asking: “can we afford it without compromising other priorities?”

The challenge

With higher interest rates, household bills, and pension responsibilities also in play, the couple wanted to explore funding options that wouldn’t entail short-term sacrifices or long-term regret.

School fees had already increased by 8% year-on-year, and with the introduction of VAT, the projected total for two children from Year 3 through to Year 13 had risen to more than £410,000.² While the couple had the resources to meet some of the cost, they needed a sustainable plan – one that wouldn’t deplete long-term savings, derail their retirement strategy, or leave them financially exposed.

They also wanted to bring grandparents into the conversation. Both sets were eager to contribute, but none of the family knew how to structure gifts in a way that would be tax-efficient. The couple were also weighing the trade-offs between drawing on pensions, cashing in Individual Savings Accounts (ISAs), or exploring trusts.

They knew what they wanted to achieve, but needed guidance to realise their goals.

Making it happen

We started with a conversation about values, not just numbers. What did a good education mean for their children? What did financial security look like for them? From there, we built a tailored plan that modelled the full cost of school fees, term by term, over more than a decade – factoring in inflation, VAT, and alternative funding scenarios.

From a wealth planning perspective, we evaluated multiple financing streams:

• First, we reviewed disposable income and expenditure, as many couples use potential surpluses to cover school fees.
• Second, we assessed existing savings and investments to determine the amount that could be allocated.
• Third, we combined surplus income with available capital.
• Finally, we maximised the use of all tax efficient allowances, such as pensions and ISAs.

We also examined the value of their investable assets, assessed the couple’s investment risk profiles, evaluated their capacity for loss such as the ability to withstand market downturns, and considered their time horizon – identifying which funds could be accessed and at what point.

Using cashflow modelling, we tested drawdowns from ISAs and a general investment account against their projected retirement needs, while also considering various potential economic scenarios in the coming years. We discussed the implications of early pension access but highlighted that this could limit future contributions and tax efficiency. Grandparent contributions were modelled using surplus income gifting rules, ensuring support could be given without triggering inheritance tax complications.³

Throughout, we worked closely with the family’s accountant and solicitor to ensure our recommendations aligned with wider planning and regulatory guidance.

The outcome

With the right blend of investment strategy and intergenerational planning, the couple could meet school fee commitments − term by term, tax efficiently − while still protecting their long-term goals.

Initially, we reviewed full protection needs – income, life cover and critical illness − to ensure financial obligations could be met in case of any unforeseen events. The couple then drew from cash and medium-term investments, depending on when the fees were due, while grandparents utilised surplus income gifting rules to make regular contributions.

What’s more, any surplus could be reallocated for the children’s postgraduate tuition or future house deposits.

With our help, the couple established a multi-layered strategy that helped them fund their children’s education in a way that was structured, tax-efficient, and future-ready. We also completed a wider financial review aligned to their retirement planning.

They had the idea. We made it happen with expert insight and a financial plan designed to adapt to their evolving needs.

Next steps

Discover how financial and tax advice could help you plan for school fees and secure your child’s future.

Find out more from our dedicated support team by calling us on 020 7246 1111. Opening hours are Monday to Friday 9am to 5pm – let’s start the conversation today. 

Important information

This case study is based on illustrative scenarios. All figures, tax rates, and thresholds reflect planning assumptions as of April 2025 to demonstrate how advice-led financial planning can help clients achieve their long-term goals. This material does not constitute tax or legal advice. It is not intended to provide personal financial advice or recommend pursuing a specific strategy. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. The value of investments, and any income from them, can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

1. ISC Annual Census, 2024. From 1 January 2025, private school fees in the UK are subject to 20% VAT, as per the government’s policy changes announced in July 2024 and confirmed in the October 2024 Budget. ↩︎
2. Brewin Dolphin, VAT on Private School Fees: How to Manage the Cost, July 2024 ↩︎
3. RBCBD Internal Planning Assumptions v2.6, 2024 ↩︎

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The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Forecasts are not a reliable indicator of future performance.