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“Isabella, originally from Australia, has been living in Singapore with her parents and has decided to follow in her British mother’s footsteps and head to the UK for university. Studying for a Bachelor of Business Administration at Manchester University will cost her £18,500 per year. Her friend Olivia headed to the UK a few years ago and studied the same course, but it cost £9,250 per year because her fee status was different from Isabella’s. A key difference for Olivia’s family was that her grandparents, based in the UK, supported her financially through university, and by doing so, reduced their own UK inheritance tax liability.”
When the time comes to send your children off to university in the UK, it is important to consider the cost and what their fee status will be.
How do I know my fee status?
Your child’s fee status determines the level of tuition fees that you will pay when they head to university. There are two levels of fee status – a ‘home’ fee which is set at a capped amount by the government, currently £9,250 per year, and ‘overseas,’ which is often much higher and is not capped. It can be complicated to determine your child’s fee status as each of the four UK nations has different rules. This means that for expatriate families, understanding your fee status is crucial as each university may classify it differently.
Requirements for home fees
The specific requirements to qualify for home fee status generally include residency and immigration status. For British and Irish expatriate applicants, you will need to demonstrate that you have been ordinarily resident in the UK or Ireland for a certain period before the start of the course. The university will determine whether you have a life in the UK or are only temporarily absent from the UK to take up employment abroad. International student university fees in the UK can vary significantly depending on the university, the course of study, and the level of study.
Undergraduate courses
- Arts and Humanities: £10,000 to £20,000 per year
- Science and Engineering: £12,000 to £25,000 per year
- Clinical courses (such as medicine): £30,000 to £40,000 per year
Postgraduate courses
- Arts and Humanities: £11,000 to £25,000 per year
- Science and Engineering: £13,000 to £27,000 per year
- MBA programmes: £15,000 to £40,000 per year
In addition to tuition fees, international students should also budget for living expenses, which can vary depending on the location of the university. Understanding UK Inheritance Tax Planning could help. Death duties have been with us for centuries, in the guise of Estate Duty, Capital Transfer Tax, and now Inheritance Tax (IHT). Whatever their name, the purpose is always to raise revenue from people’s estates. Once considered a tax on the rich, IHT now affects more estates than ever.
The first £325,000 of an individual’s estate (referred to as the nil-rate band) is taxed at 0%, so is not liable to IHT. Subject to other allowances being available, the entire estate in excess of the nil-rate band is taxed at a flat rate of 40%, assuming you have no charitable bequests. Everyone who has their permanent home in the UK (or is ‘domiciled’ in the UK) is subject to IHT on ‘transfers of value’. This covers all their worldwide assets with the exception of excluded property, which are listed alongside. Those who are not UK-domiciled are usually only subject to IHT on their UK assets and any offshore assets (such as shares in an offshore company) that get their value from UK residential property.
How to minimise inheritance tax & potentially exempt transfers
Regular gifts out of income
Making regular payments for grandchildren’s university fees from surplus income, these payments can be exempt from inheritance tax
Annual gift exemption
Each individual can give away up to £3,000 per year without incurring inheritance tax.
Education exemption
Another option for grandparents is to make payments directly to an educational institution for tuition fees.
Lifetime giving
You can make larger gifts and potentially reduce your estate value below the current inheritance tax threshold. Gifts made more than seven years before your death are usually exempt from inheritance tax
Financial planning considerations
- Assessing costs of education and living costs
- Funding sources – start saving early in a tax-efficient way
- Think about family support. Grandparents may look to support grandchildren with
university costs and this may help with their potential UK inheritance tax liability - Planning for children’s education costs and helping aged parents while away from home with UK Inheritance tax planning requires specialist attention
Introducing the Eight Tax and Accountancy services
Tax efficient planning is a complex subject, particularly for families with international considerations. Alongside a specialist team of accountants, we can help you understand the options available to you when assessing your position.
Contact +65 8161 9426
Alexis.livanes@sjpp.asia
Alexis Livanes Partner Eight Wealth International
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. You are advised to seek independent tax advice from suitably qualified professionals before making any decision as to the tax implications of any investment.
The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives. Members of the St. James’s Place Partnership in Singapore represent St. James’s Place (Singapore) Private Limited, which is part of the St. James’s Place Wealth Management Group, and it is regulated by the Monetary Authority of Singapore and is a member of the Investment Management Association of Singapore and Association of Financial Advisers (Singapore). Company Registration No. 200406398R. Capital Markets Services Licence No. CMS100851. St. James’s Place Wealth Management Group Ltd Registered Office: St. James’s Place House, 1 Tetbury Road.
