inheritance tax Archives

11th June 2025

Private School Fees: A Smart Strategy to Reduce Inheritance Tax?

For many high-net-worth families, private education is not just an investment in a child’s future, it’s also a potential opportunity to reduce inheritance tax (IHT).

While school fees are often viewed as personal expenditure, with the right legal and financial advice, they can form part of a broader estate planning strategy—potentially reducing your taxable estate and easing the future burden on your heirs.

Understanding the IHT Landscape

Inheritance Tax is currently charged at 40% on estates above the nil-rate band of £325,000 (or up to £1 million for married couples with the residence nil rate band).

Families who have worked hard to build wealth—whether through property, business, or investments—often find IHT to be one of the most significant risks to preserving that legacy.

With thresholds now frozen until 2030, more estates will inevitably be drawn into the IHT net as asset values rise. That makes proactive planning not only smart but increasingly essential.

That’s where private school fees come into the picture.

Can School Fees Really Help Reduce IHT?

Yes, but only if structured correctly.

If you’re a grandparent or parent paying for your child’s or grandchild’s education, lifetime gifting rules apply. This means:

You can gift up to £3,000 per year tax-free under the annual exemption.
You can also make regular gifts from surplus income—and this is where school fees become particularly useful.

Gifts made from excess income (not capital) and on a regular basis are immediately exempt from IHT, provided they do not affect your standard of living. This can include:

Termly school fees
Contributions to boarding costs
Private tuition or extracurricular education

The key is proving that these payments are part of a consistent pattern, funded from income rather than capital.

Why Families Are Considering This Now

Rising school fees, paired with frozen IHT thresholds, mean more families are exploring this route as a way to reduce estate values while providing meaningful support to the next generation.

It’s a chance to see the benefit of your wealth in your lifetime, rather than waiting until your estate is distributed.

“For many clients, the real value is not just in reducing tax, but in being able to contribute meaningfully to their grandchildren’s future,” says Anu Khanduja, Senior Solicitor, Private Client Team at Vyman Solicitors.

“With careful planning and clear documentation, school fees can be a powerful and legitimate tool in your inheritance tax strategy.”

What Should You Do Next?

Before you begin paying school fees with IHT planning in mind, it’s crucial to:

Keep clear records of income and payments
Document your intention to make these gifts regularly
Ensure the payments are affordable from surplus income

You should also review your Will, estate structure, and trust arrangements to ensure everything aligns with your overall objectives.

Let’s Talk About Your Legacy

Whether you’re looking to reduce your inheritance tax liability or support future generations with private education, our Private Client team can help you structure your affairs with care and precision.

We work closely with your accountants and financial advisors to ensure your school fee planning sits within a wider, tax-efficient estate plan.

Ready to explore how your family’s education goals can form part of a smart inheritance tax strategy?

Contact Anu Khanduja and our Private Client team today.

Call us on 020 8427 9080

Email: anu.khanduja@vyman.co.uk

Learn more about our services

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Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Professional advice should be sought for your specific circumstances.

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About Vyman Solicitors

Located in North West London, Vyman Solicitors provides a comprehensive range of legal services, including Corporate & Commercial Property Law, Litigation, Residential and Conveyancing Law, Family Law, Private Client and Immigration. Known for its commitment to personalised client support and legal excellence, Vyman is a trusted partner for businesses and individuals alike.

Follow Vyman Solicitors on LinkedIn, Instagram and Facebook.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice.

3rd March 2025

Inheritance Tax Planning: Don’t Miss the Year-End Opportunity to Protect Your Wealth

As the year-end tax review approaches, now is the time to ensure your inheritance tax (IHT) planning is up to date. Without proper preparation, IHT—charged at 40% on estates above £325,000—can significantly reduce what your loved ones inherit.

Key Year-End Considerations for Inheritance Tax Planning

Use Your Gifting Allowances: Take advantage of the £3,000 annual gifting allowance before the tax year ends. Gifts made more than seven years before your death are IHT-free.
Maximise Nil Rate Bands: The nil rate band (NRB) is £325,000 for 2024/25, with an additional £175,000 residence nil rate band for property passed to direct descendants. Couples can transfer unused NRB, doubling their exemption.
Secure Wealth Through Trusts: Setting up trusts before the tax year closes can reduce your taxable estate while maintaining control over your assets.
Consider Life Insurance: A life insurance policy can help cover IHT liabilities, preventing your heirs from having to sell assets to pay taxes.

Why Planning Before Year-End Matters

Acting before the end of the tax year allows you to utilise annual exemptions, reducing your estate’s value and ensuring your loved ones inherit more. With inheritance tax thresholds frozen until 2028, early planning is essential to mitigate rising tax liabilities.

How Vyman Solicitors Can Help

Our Private Client team is here to help you maximise IHT reliefs before the tax year ends. From setting up tax-efficient Wills to advising on trusts and lifetime gifting, we’ll ensure your estate is structured to benefit your loved ones.

Book a consultation today to review your inheritance tax plan before the year-end deadline or please call our Private Client team, who will be happy to assist you 020 8427 9080.

Don’t wait—secure your family’s future now.

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About Vyman Solicitors

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10th December 2024

Labour’s Tax Reforms – Impact on Inheritance, Divorce & Family Wealth

The Labour Party’s first budget in over a decade has introduced significant changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT), with wide-reaching implications for families across the UK. These reforms, set to take effect in April 2026, could profoundly impact how wealth is transferred, how estates are planned, and how family assets are divided during divorce.

If you’re planning your family’s financial future or navigating the complexities of a divorce, these changes may require a fresh look at your legal and estate planning strategies.

What’s Changing? The Key Tax Reforms

The upcoming budget has sparked conversations about the potential effects on business and property disposals, estate planning, and family wealth transfer. Key changes include:

New Tax Treatments for Business and Agricultural Reliefs: Revisions to IHT and CGT reliefs could change the way assets such as farmland and business properties are taxed, impacting long-term wealth planning.
Inclusion of Pensions in Estates for IHT: For the first time, pensions may be considered part of an estate for IHT purposes, potentially increasing tax liabilities for families.

These changes make it essential to rethink how assets are managed, whether for legacy planning or during major life events such as marriage or divorce.

What This Means for Divorce and Family Wealth

Under the laws of England and Wales, all assets—including inheritance and family gifts—are considered in divorce settlements. Whether these assets are shared or ringfenced depends on factors like:

Timing: When the asset was received.
Use: How it was utilised during the marriage.
Needs: Whether the couple’s reasonable needs can be met without dividing the asset.

Courts may allow certain inherited assets to remain untouched, but this is far from guaranteed. With the UK divorce rate still above 40%, the changes to tax reliefs add complexity to an already challenging process.

How Nuptial Agreements Can Help Protect Wealth

The evolving tax landscape highlights the value of prenuptial and postnuptial agreements as tools for safeguarding family wealth. These agreements:

Clearly outline how assets, including family gifts and inheritances, will be handled during divorce.
Offer an added layer of protection for wealth transferred under IHT rules.
Complement estate planning strategies by helping to preserve family legacies.

While not legally binding, courts give significant weight to well-drafted nuptial agreements, especially when they are fair and created with independent legal advice.

Why Acting Now is Crucial

The new tax rules are a wake-up call for families to review and update their estate and wealth management plans. Proactive planning can ensure that your assets are protected and that you and your loved ones are prepared for any potential changes in tax liabilities or financial obligations.

How Vyman Solicitors Can Support You

At Vyman Solicitors, our Family Law and Private Client teams specialise in helping individuals and families navigate these complex issues. Whether you’re facing a divorce, planning for future wealth transfers, or considering a nuptial agreement, we’re here to provide expert advice tailored to your needs.

Our services include:

Assisting with the drafting and implementation of prenuptial and postnuptial agreements.
Providing clear guidance on the implications of IHT and CGT changes for family wealth.
Supporting clients through sensitive divorce proceedings to achieve fair outcomes.
Reviewing estate plans to align with new tax regulations.

Take Action Today

The changes to IHT and CGT are coming fast, and early preparation is key. Whether you’re planning your family’s legacy or navigating the complexities of a divorce, now is the time to act.

Contact us today at info@vyman.co.uk or call 020 3926 6987 to schedule a consultation with our expert team.

Let us help you protect what matters most.

By acting now, you can ensure that your family wealth remains secure and your future plans stay on track.

At Vyman Solicitors, we’re here to guide you every step of the way.