Offshore bonds for university fee provision?

As my 16 year daughter gaily announced that she’s found another University near London that she might like to try, it did strike a chord that the financial burden for children goes way beyond standard school fees.

You could argue that the cost of children never diminishes or goes away completely, but that’s another argument for another day.

Whatever the eventual cost and in whichever location, having funds available to help ease the pain is the thing to do.

There are a number of ways to plan for further education fees; using the maximum ISA allowance each year, savings accounts, collectives and even using tax free cash from pension can all play a part.

I’d like to focus on how an Offshore Bond could be a vital addition to your further education fund armoury.

As I touched upon in a previous blog, the tax regime in the UK is punitive and using the tax free growth status of an Offshore Bond to provide fees by way of assignment to a non-UK taxpayer (like a Student) is worthy of consideration.

The Offshore Bond also has further advantages over other forms of saving in as much as there are no upper contribution limits (like an ISA or pension), access at anytime and a wide range of investment options which can include our Dimensional run passive portfolios.

A higher rate tax payer can take advantage of tax free growth offshore and potentially could provide annual University fee help to their children by then assigning policy segments to them. Providing the recipient is a non-taxpayer, there will be no tax to pay.

Care needs to be taken when accessing benefits from an Offshore Bond if you are a higher-rate taxpayer and I would discuss this in more detail in individual cases.

Add the ability to take tax deferred income for 20 years and a range of Trust options, then the Offshore Bond is a very handy addition when considering funding for further education fees.

This is a very brief introduction to the concept of Offshore Bonds and I would be happy to discuss this subject or any other of your financial planning needs at any time.

Roland Oliver