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private school fees

How do parents save for private school fees?

One way is to use Investment Bonds, which are popular with wealthy investors who use them as tax efficient wrappers for holding assets.

The bonds are life insurance policies and are typically used to generate a long term capital growth, with the flexibility for the bond holder to withdraw up to 5% of the capital invested when needed and to defer any tax charge until the bond is fully cashed in.

The issuer of the bond pays the equivalent of basic rate tax currently 20% on the income and gains of the bond, and when the bond matures the taxpayer has no tax liability unless they are a higher rate tax payer at the time, thus the attraction of investment bonds.

The bonds whilst being attractive for tax purposes should only be used once you have used your ISA allowance, where the gains and income are free of tax.