UK Fact-File Part 7:
Business Owner Welfare and Lifestyle

7.6 UK Education

Education

The UK still has a good state education system, although it has fallen down the international rankings in many respects, and employers frequently complain that school-leavers lack basic numeracy and language skills. Depending on the place of residence it is not always possible to send one’s children to the state school of choice. Should parents relocate, it can also be difficult to find a suitable school in the new area. State schools may not be able to cope as easily with children from a foreign country coming to the UK.

The UK probably has the best network of independent (private) education schools in the world – there are 2,500 private schools in the country. Average fees for private schools are in excess of GBP10,000 per year. A number of top-class international schools provide non-sectarian, co-educational facilities and offer English as an additional language to foreign students as well as offering courses in certain native languages. Schooling can be day-attendance or boarding. A list of private schools by county together with a description of the different types of education can be found at: http://www.privateschools.co.uk/

Due to the high cost of private education, it is advisable to take out some form of insurance cover, in the event of illness, accident, or death befalling the fee-payer, and preventing them from fulfilling their role as the head of the business. This would cover the school fees in the event of such occurrences. The insurance market for this type of cover is restricted; providers such as http://www.sfs-group.co.uk can provide more information about available cover.

In terms of educating under the British system outside of the UK, British international schools have a world-class reputation. There are more than 2,000 schools outside of Britain teaching some elements of the UK National Curriculum. Choosing the right international school requires help and advice from various parties – the British Embassy, British Council or maybe an expatriate organization. The Independent Schools Council represents independent schools in the UK and information about the schools is available on their website (www.isc.co.uk).

The tax treatment of education costs

There is no tax relief available for the cost of school fees. However, there tax-efficient ways of funding school fees. Putting the maximum tax-free amount into an individual savings account (ISA) is one way to obtain tax-free profits and interest. Using the capital gains tax allowance (CGT) is an efficient way of providing income towards school fees – using the annual CGT allowance for every individual.

Capital can be taken out of a business to fund school fees and then borrowing arranged to repay the business. Provided that it can be shown that the borrowing is for business purposes, the interest payments for the new loan will be tax deductible. Expert financial advice is essential in this area to avoid other tax implications.

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