National society IFA Continuum warns that those looking to help family members with the rising cost of continuing education should plan ahead to avoid tax pitfalls.

As universities return across the UK, more UK investors are funding the continuing education of future generations than ever before. National society IFA Continuum warns that those looking to help family members with the rising cost of continuing education should plan ahead to avoid tax pitfalls.

The latest data released by the House of Commons on student loans in July showed that currently nearly £20billion is on loan to around 1.5million higher education students each year, with average debt among borrowers who started their course in 2021/22 reaching £45,800 per hour their course ends.

As the cost of continuing education and student debt rise, many older family members are prioritizing funding for their children’s and grandchildren’s continuing education to give them a boost on the journey. career they have chosen.

However, according to national society IFA Continuum, it is important for those looking to help fund further education for younger generations that they make sure to plan ahead, consider the impact on their own finances and to ensure that they choose the most appropriate investments while avoiding any tax trap.

Ben Alcock, Certified Financial Planner at Continuum, said: “The current cost of living crisis may make the future uncertain for younger generations. But the outlook doesn’t have to be bleak.

“If they could be supported by their parents or grandparents to meet the initial challenges of funding continuing education, the next generation may still be able to look forward to security and prosperity in the career of their choice. .

“The good news is that with careful investment, even relatively small sums can make a difference to their future, especially when planning ahead.

“The first step is to get your own finances in order, then when you know what reserve resources you need to call on, you can start planning how best to use them.”

There are several different avenues through which older generations can help finance the further education of their children and grandchildren.

An ISA could provide a simple way to invest, with all the profits going to them rather than the taxman, and would offer flexibility in when and how the funds are used to help fund the cost of education superior.

A Junior ISA allows you to invest on their behalf. Parents or guardians with parental responsibility can open a Junior ISA and manage the account, but the money belongs to the child.

The child can take control of the account when they turn 16, but cannot withdraw the money until they turn 18. Anyone can contribute in each tax year to the annual allowance, which for 2022/23 is £9,000.

Traditional savings accounts can also be a simple way to save for the education of future generations. However, in today’s economic climate, even with preferential rates, they don’t pay much more than a piggy bank.

As the Bank of England continues to raise interest rates, allowing high street savings providers to raise the rates they offer, they are still unlikely to compare with the loss of power d purchase caused by inflation.

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