If you’re thinking of moving back to the UK from Hong Kong in the near future and have children, one key aspect you’ll need to consider is likely to be their future education.
Clearly, arranging the funding for the sort of education you want to provide for them is important. The birth of a child is usually a good prompt to start thinking about potential school fees and, further down the line, supporting them financially through university.
There are other key issues that you should bear in mind and include in your financial plan. These will include where you’ll be living and the type of education you want your children to have.
In this article, read about six important factors to consider when you’re planning your children’s educational future.
1. Where you live will be a key factor
In a previous article I wrote, you can read our thoughts about some of the best places to live in the UK.
Clearly your job may restrict where you live. Obviously, there’s a level of flexibility in terms of the potential accessibility of major cities from the areas around them.
For example, in London the area within one hour’s commute is vast – ranging from parts of the south coast up to Hertfordshire and Buckinghamshire.
If you have the luxury of a blank canvas – maybe you’ll be working at home or are planning to retire – then you’ll be able to access a wider choice of schools.
2. The cost of private education is going up
If you’re planning to get your children educated privately – outside the state sector – then you’ll want to start by researching the private schools near where you’ll be living.
You’ll also want to establish a clear idea of how much private education will cost.
A recent article in the Times revealed that the cost of private education rose by 6.5% in 2021. With inflation currently at 5.5%, and widely predicted to go higher in 2022, it’s worth anticipating further increases in the near future.
A report in the Guardian in October 2021 confirmed that the average private school fee (not including boarding schools) was £13,700 a year.
If you’re considering boarding school – maybe if you intend to still be internationally mobile after your return from Hong Kong – then another Times report suggested that the cost of top boarding schools was set to exceed £45,000 a year.
3. Funding your children’s educational journey
Armed with the figures outlined above, you’ll want to start considering how you’ll fund your children’s education.
You may already have the means in place, so it will simply be a process of finding the right investment strategy to ensure the funds are available when you need them.
If you’re building a new pot of money specifically for educational purposes, you’ll want to consider the time frames you’ll be investing over, and the amount of money it’s likely you’ll require when you need to start paying for education.
By factoring in reasonable investment growth rates, you’ll have a decent idea of how much you’ll need to invest on a regular basis.
Then, you’ll want to ensure that any money you do invest can grow as tax-efficiently as possible. With this in mind, you may want to consider utilising your annual ISA allowance of £20,000 – and that of your spouse or partner if required. Funds you take from your ISA are free from Income Tax and Capital Gains Tax (CGT).
Also bear in mind that each individual has an annual CGT allowance of £12,300 (currently frozen until April 2026), which means you can’t make gains from non-ISA investments such as stocks and shares up to that amount each tax year, free from CGT.
Finally, if you’re transferring financial assets from Hong Kong to the UK, you’ll want to do this as tax-efficiently as possible. Assigning offshore bonds segments to children aged 18 and over can be a good way of reducing your tax liability on money earmarked for university fee funding.
4. You’ll want to research the best schools
You’ll obviously want to ensure your children get the best possible education, so that will involve some research.
Your choice could be dependent on any specialist subjects you want your children to study. For example, some schools will have a reputation for the sciences, while others will be geared towards foreign languages.
Private school websites will give you a good idea of the curriculum and the main areas of focus when it comes to educating and developing your child.
In the public sector, Ofsted reports and local league tables can provide you with a good guide to the educational standards and environment of a particular school.
5. Don’t forget university funding
As well as funding your children’s education up to the age of 18, you might also want to consider supporting them through university.
The current maximum annual cost of tuition fees at universities in England for home students is £9,250 (£9,000 in Wales). It’s significantly higher for international students.
If the fees are not paid at the time, they are treated as a loan that you child will start repaying from such a time as they earn more than a certain amount – currently £27,295 a year.
You might want to consider funding this, to avoid your children starting their working life with a large debt hanging over them.
Also don’t forget the other associated costs of university, including accommodation, subsistence, and equipment.
6. Cashflow forecasting can help your planning process
Cashflow forecasting can help you to see the impact the paying of school fees could have on your financial situation in future years, in particular your longer term retirement planning.
This will obviously help support your planning process by looking at the wider picture rather than simply focusing on a single issue.
By updating the information used to produce a cashflow forecast on an annual basis, you’ll be able to check you’re on track to provide the required funding and take steps to stay on course if required.
Get in touch
If you want advice about how to fund your children’s education please contact us by email or, if you prefer to speak to us, you can reach us in the UK on +44 (0) 208 0044900 or in Hong Kong on +852 39039004.
Production
