'Don't pay your kids tuition fees upfront' Discussion Area

buffman

There is no Inheritence Tax issue even if the paymnet is, say, £25K to cover 3 year's maintentance?

Lokolo

buffman wrote: »

There is no Inheritence Tax issue even if the paymnet is, say, £25K to cover 3 year's maintentance?

If you are giving as a lump sum then there may be some problems as it's not a regular maintence gift.

However you will need a large estate for it to be considered (over £650k).

buffman

Lokolo wrote: »

If you are giving as a lump sum then there may be some problems as it's not a regular maintence gift.
.

So rather than make it a one off payment of £25k, it would be safer to give £8333 anually to avoid inheritance tax issues?

tyllwyd

If you are worried about inheritance tax then the best place to ask for advice is the cutting tax board. But as Lokolo said, your estate has to be over the threshold before inheritance tax becomes an issue, and also, a gift like this would be a 'potentially exempt transfer' so as long as you live for more than seven years following the gift, then it won't be liable to inheritance text.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

Edited to say - I don't claim to have any taxation knowledge, but from the link above I'd say that either monthly gifts, or a one-off gift (and then surviving for at least 7 years!) are the best from an inheritance tax point of view.

abster31

Whilst I applaud your efforts Martin to reassure us not to pay up front, there are too many assumptions and I just fit that bill. I actually mailed you when this fiasco first came out and did not get a reply.

I am 31, and therefore have had my children. I decided to change my career and went back to college three years ago to gain the UCAS points needed for University. This is when the fees were £3250. This was affordable and we could pay the fees, just.

Now the fees are £9k I am really stumped. Firstly I am absolutely disgusted that the Lib Dems could do this after everything that they promised. Secondly, how ludicrous that we are not told the exact terms and conditions!

I am struggling with the concept. I already have two children. My fiance is 53 and has children and had the snip. So we are DEFINATELY NOT having any more children. So I will not be having any career breaks. By the time I qualify I will be 34 and the thirty years brings me up to retirement.

I am likely to earn pretty reasonably as a Building Surveyor. I was planning to pay fees up front but cannot afford to with this ridiculous amount.

Now could you please tell me how I gain out of the system as you are suggesting many will? I am only going to borrow the fees, so approximately £27,000 for the three years. It a kick in the face this amount, but what is even worse is that I could pay back three times that!

This notion that many will not earn £21k is absolute crap. I earn 18k working as a store manager for goodness sake.

I think there should be a cap on how much you should pay back, say no more than 1.5 times what you borrowed? which is still a healthy profit to the government. Afterall, with a better career and higher earnings I will be paying more tax.

I do have savings but no where near enough. I would run out in 18months time, and as its clear you pay the same percentage of earnings back regardless I dont see the point of using these earnings to chip off a small piece of a large debt. I may inherit who knows, but they have not even told us what penalty will be applied if you repay early! Only that they have scrapped the idea.

How I ask is this fair? If you take out a loan, you are told the interest and the terms of the loan. They are not doing this. I feel my loan is something provided by wonga and not the governement. No wait! Wonga have their sliders and you know EXACTLY what your paying back.

I feel this government are penalising students who want a good career. They need to be careful as people will start to resent earning a higher salary and paying taxes into a country which will not support their future!

Lokolo

abster31 wrote: »

I am 31, and therefore have had my children. I decided to change my career and went back to college three years ago to gain the UCAS points needed for University. This is when the fees were £3250. This was affordable and we could pay the fees, just.

Well you could have taken out a student loan.

abster31 wrote: »

Now the fees are £9k I am really stumped. Firstly I am absolutely disgusted that the Lib Dems could do this after everything that they promised. Secondly, how ludicrous that we are not told the exact terms and conditions!

The lib dems weren't fully incharge and terms and conditions have been released so not sure why you are complaining about these.

abster31 wrote: »

I am struggling with the concept. I already have two children. My fiance is 53 and has children and had the snip. So we are DEFINATELY NOT having any more children. So I will not be having any career breaks. By the time I qualify I will be 34 and the thirty years brings me up to retirement.

OK.

abster31 wrote: »

I am likely to earn pretty reasonably as a Building Surveyor. I was planning to pay fees up front but cannot afford to with this ridiculous amount.

Hence the LOAN.

abster31 wrote: »

Now could you please tell me how I gain out of the system as you are suggesting many will? I am only going to borrow the fees, so approximately £27,000 for the three years. It a kick in the face this amount, but what is even worse is that I could pay back three times that!

You COULD, but also, you may pay back nothing of the £27k.

abster31 wrote: »

This notion that many will not earn £21k is absolute crap. I earn 18k working as a store manager for goodness sake.

Where is this notion that many will not earn £21k?

abster31 wrote: »

I think there should be a cap on how much you should pay back, say no more than 1.5 times what you borrowed? which is still a healthy profit to the government. Afterall, with a better career and higher earnings I will be paying more tax.

A healthy profit? I assume you've got the figures to back this up. The chances are the government aren't going to make a single penny of profit, but (and hopefully) reduce the yearly losses of university education.

abster31 wrote: »

I do have savings but no where near enough. I would run out in 18months time, and as its clear you pay the same percentage of earnings back regardless I dont see the point of using these earnings to chip off a small piece of a large debt. I may inherit who knows, but they have not even told us what penalty will be applied if you repay early! Only that they have scrapped the idea.

Why does it matter if you don't pay it all back? You do realise it gets wiped after 30 years? So when you reach retirement, you won't owe any more student loan! Even if you haven't paid any back!

abster31 wrote: »

How I ask is this fair? If you take out a loan, you are told the interest and the terms of the loan. They are not doing this. I feel my loan is something provided by wonga and not the governement. No wait! Wonga have their sliders and you know EXACTLY what your paying back.

You do know how much interest will be charged and you do know how much you will be paying back.

I feel this government are penalising students who want a good career. They need to be careful as people will start to resent earning a higher salary and paying taxes into a country which will not support their future!

And I feel as though you don't fully understand what you are talking about.

Dunroamin

abster31 wrote: »

This notion that many will not earn £21k is absolute crap. I earn 18k working as a store manager for goodness sake.

Lots of graduates don't earn £21,000 either because they're in lowish paid jobs, they're unemployed or they only work part time. Many of these would give their eye teeth to be working as a shop manager.

.

jago25_98

I think the Sov'Man newsletter sums it up. Sadly this isn't offtopic.

They in debt future generations to 'stimulate' the economy. It does nothing. So they stimulate again. And again.

Nothing that central banksters or politicians have done since the 2008 global financial crisis has fundamentally changed economic conditions. Yet they keep applying the same remedies, drawn from the same old Keynesian playbook.

The false premise which guides their decisions is that we can all grow wealthy by borrowing and consuming, instead of by producing and saving. People have been sold this lie for more than a generation. It is embedded in social DNA.

In the current western economic system, you are rewarded for going into debt with all sorts of tax deductions. Save money, on the other hand, and you are punished through taxation and inflation.

The incentives are all wrong; it's no wonder that people have over-borrowed and overspent given that the system is so blatantly slanted to promote such behavior.

Housing is one of the most interesting examples of bad incentives: tax policy in many countries encourages people to take out debilitating mortgages, and governments end up with a moral imperative to ensure home prices continue rising.

This strikes me as truly bizarre. You'd think people would want housing costs to stay low and affordable, not rise.

Nobody cheers when the price of healthcare goes up, even though they could just as easily profit by investing in any number of insurance companies.

I don't click my heels when the price of food goes up in the grocery store, even though we've been paid handsome sums from the bountiful harvests of our farm in central Chile.

And let's not forget how much turmoil ensues when gasoline prices get too high. Why should housing be any different?

For the vast majority of people, a house isn't wealth. It's an expense. And wishing for this expense to increase is both foolish and destructive.

Yet most politicians and central banksters in the west are frantically fanning the flames of broken housing markets, desperately trying to re-inflate prices.

Here in Portugal, for example, housing prices have fallen dramatically. Housing has become affordable. Cheap, even. This is a good thing.

Don't forget about the selling of student debt to loan companies and the people who have had bailiffs on their property as a result.

Inflation is much expected but debt is still a bad thing...

In a few months I will be taking an industry specific course in an unnamed subject. The fee is £1500. After this I hope to earn £350 a day.
It's also possible to get a similar pay back studying in India, Nigeria, it's a big market.

Person_one

buffman wrote: »

So rather than make it a one off payment of £25k, it would be safer to give £8333 anually to avoid inheritance tax issues?

It would be safer and far more sensible to give it monthly as a standing order.

melancholly

Dunroamin wrote: »

Lots of graduates don't earn £21,000 either because they're in lowish paid jobs, they're unemployed or they only work part time. Many of these would give their eye teeth to be working as a shop manager.

.

Especially right now.... I can't believe anyone has missed the news reports of how many graduates are struggling to get jobs. It's a bad time for everyone!

http://www.guardian.co.uk/news/datablog/2012/mar/06/graduate-employment-low-skill-jobs

Here's a nice article with lots of data and graphs to make the point. The first line is "Recent graduates are more likely to work in a lower skilled job than ten years ago"

As ever, we've missed the boat for stopping these student finance changes. The fight was lost and now it's about making the best of the situation - however the hysterical posts about it remain an over-reaction. Things are undoubtably worse for the 2012 entry, but the world is not ending!