Book A Demo

Insights Category: Financial Planning

Paying For Private School Fees: Start Planning Early And Optimise For Tax Efficiency

Introduction

More children than ever before are attending private schools for a higher quality education, smaller class sizes, more abundant resources, and specialised academic and vocational programmes. The number of pupils attending private school has steadily increased over the past decade, with a record 556,551 pupils now attending 1,411 Independent School Council (ISC) member schools across the UK, the highest level since records began in 1974.1

However, giving your children the best possible education comes at a cost, and the expense was already a barrier for many families – before the application of VAT to school fees from January 2025.

While the cost of tuition fees can vary widely depending on the school and location, sending your child to a private school as a day pupil had cost, on average, £23,925 per year, rising to £42,459 for pupils who board.2 However, fees at some private schools can be considerably higher. Unless your school has absorbed some of the increasing costs, the application of VAT at 20% brings the average day fee to £28,710, and the average boarding fee to £50,951.

1, 2 ISC Census and Annual Report, January 2024

At a glance

  • Parents could face around £460,000 in day pupil fees or £815,000 in boarding fees for each child.
  • ISAs and Investment Bonds can be used as tax wrappers to save towards school fees, potentially making tax-efficient or tax-deferred returns on your investment.
  • Unit Trusts and General Investment Accounts (GIAs) may also provide access to investing in various asset classes, with tax treatment dependent on individual circumstances.

Take Your Autumn Statement Impact Assessment

Start Now

Average boarding school fees to hit £50,000 per year

Taking a tax-efficient approach to saving towards private school fees…

Let’s assume that school fees increase by 3.5% a year. This would be the lowest increase seen over the course of a 14-year education, particularly in comparison to an 8% uplift from 2023 to 2024. Based on the average costs, parents could face around £460,000 in day pupil fees or £815,000 in boarding fees for each child.

However, while these figures are considerable, the sooner you start saving towards your child’s school fees, the better.

By starting early, saving regularly, and investing, parents could build up a substantial sum over time to help cover the costs of private education.

Taking a tax-efficient approach to school fees can help make private education much more accessible.

Key tax-efficient solutions

Individual Savings Accounts (ISAs)

An ISA is a tax-efficient investment vehicle that enables parents to put aside a certain amount each year, without incurring any income or capital gains tax (CGT) on the interest or investment returns earned on the savings.

If both parents make monthly contributions that fully utilise their ISA allowance (£20,000 per person in the 2024/25 tax year) from the child’s birth, this could accumulate to a sum of £585,000 by the time the child is 11 years old, based on 5% net annual growth after fees, compounding monthly.* Withdrawals from an ISA are tax efficient, so parents can extract funds as needed to pay for school fees without incurring any capital gains or income tax liability, or invest in other options, such as stocks and shares.

*These figures are examples only and they are not guaranteed – they are not minimum or maximum amounts. What you get back depends on how your investment grows and the tax treatment of the investment.

The value of an ISA with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than you invested.

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

On- and Offshore Investment Bonds

An Investment Bond is a tax-efficient investment wrapper that allows parents to save and invest to pay for private school fees. An Investment Bond invests in a range of assets, such as stocks, shares, bonds, and funds. You can invest a lump sum or make regular contributions.

During the term of the investment, returns earned within the bond are not subject to income or capital gains tax (CGT), providing significant tax savings over the long term with the option to draw down up to 5% of your original investment per year on a tax-deferred basis. As the 5% allowance is cumulative, any unused allowance is carried forward for up to 20 years.**

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

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.

**Please note that if the withdrawals taken exceed the growth of the bond, the capital will be eroded.

Unit Trusts and General Investment Accounts (GIAs)

Unit Trusts and General Investments Accounts (GIAs) pool capital from multiple investors into a single fund, which is then invested across various asset classes, such as stocks, bonds, and property. Investors benefit from an annual dividend allowance of £500 in the 2024/25 tax year, and an annual capital gains allowance of £3,000 in the 2024/25 tax year.

Howver, Unit Trusts and GIAs are subject to income tax on any dividends or interests earned, which can reduce the overall tax efficiency of the investment. The tax treatment of these investments can also vary depending on personal circumstances, such as income level and tax bracket.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

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.

Gifting Allowance

Under current UK tax law, individuals can give up to £3,000 per year to another person using their annual gifting exemption, including a child or grandchild attending a private school. If you are married or in a civil partnership, you can combine this with your partner’s allowance, resulting in a total annual gifting exemption of up to £6,000 per year.

This offers a tax-efficient way to pay for private school fees. However, financial gifts above £3,000 can be subject to inheritance tax (IHT) if the donor dies within seven years of making the gift. The current nil-rate band for inheritance tax is £325,000 per person.

If a parent has adequate disposable income, this may be utlisied to pay for education costs (including private school fees) under ‘Dispositions for the maintenance of the transferor’s children’ rules.*** A disposition is not a transfer of value for IHT purposes if it is made by one party to a marriage or civil partnership and is both:

– in favour of a child of either party and
– for that child’s maintenance, education or training for a period not ending later than the year ending 5 April in which the child attains the age of 18, or
– after attaining 18, ceases to undergo full-time education

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.

***Further criteria applies within the HMRC IHT Manual IHTM04175 which is subject to change.

Scholarships and Bursaries

Many private schools offer means-tested bursaries to help with the cost of tuition. A third of pupils in private education receive means-tested bursaries,3 which can cover up to 100% of fees.

Bursaries are awarded based on financial need, and can be a valuable way for families who may not otherwise be able to afford private school, to access high-quality education for their children. The amount of the bursary awarded is based on a means test, which considers a family’s income, assets, and other relevant factors.

Scholarships are typically awarded based on merit, such as academic or athletic achievement, musical talent, or artistic ability. Scholarships may not cover the full cost of tuition. The proportion of fees covered will depend on the school and the type of scholarship offered.

3 ISC School Fee Assistance, April 2023

Paying in advance

Paying private school fees in advance can be a way to save money on the overall cost of tuition. Many private schools offer discounts to parents who pay tuition fees in advance, with the size of the discount increasing with the size of the advance payment.

However, parents considering paying fees in advance should carefully weigh the potential gains against the risks associated with tying up a significant amount of capital in pre-payment.

Depending on the investment chosen, there may be potential for higher returns than the discount offered for advance payment, but there is also a risk of capital loss.

Navigating a myriad of options

Private school education can provide children with a vital head-start and opportunities that help them to achieve their goals. However, it’s undoubtedly an expensive commitment, and navigating the options for paying private school fees can be complex and daunting.

Many options are available, including tax-efficient investments, bursaries and scholarships, pre-payment of tuition fees, and a range of capital drawdown routes. It’s important to carefully consider your options and obtain expert advice when planning and funding private school fees.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time, and are generally dependent on individual circumstances.

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Seven Steps To Retire Early

What does retirement look like to you?

Retirement often revolves around relishing life’s simple pleasures or embracing newfound financial freedom for spontaneous pursuits, fulfilling long-held dreams, and ambitions once sidelined by work commitments. This guide outlines seven steps to retire early.

Are you eagerly anticipating retirement, feeling assured that your plans are well-managed? Or do you harbour unease, wondering if you’ve adequately prepared? Perhaps you aspire to retire early but question if it’s financially viable.

Achieving a comfortable retirement entails no shortcuts, despite prevalent misconceptions suggesting otherwise. It demands diligent planning and strategic decision-making.

A £1 million pension pot might sound substantial, but it’s the pension sum many of us will require to sustain our current lifestyle throughout retirement. While it may initially appear daunting, attaining this goal is potentially achievable with the early adoption of prudent financial habits and comprehensive planning strategies.

Retire Early: At a glance

  • A couple may need in excess of £59,000 a year to live a ‘comfortable’ retirement, according to the Pensions and Lifetime Savings Association, February 2024.
  • You could get tax relief of up to 45% on pension contributions, if you’re an additional rate taxpayer, meaning a £2,000 contribution has a net cost of just £1,100.*
  • The Annual Allowance is £60,000, but this can be tapered to a lower level if you have a high income. However, personal contributions are also limited to 100% of your earnings, up to a maximum of £60,000, in the tax year the contribution is paid. This includes contributions from yourself, your employer, any third party as well as tax relief paid to the pension.
  • Compounding has the potential to significantly improve the return on your investment, highlighting the importance of starting early.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

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.

*On the basis that any tax relief over the basic rate is claimed via your annual tax return and that you have invested the additional tax relief claimed.

Retire Early: How much will it cost?

Research for the Pensions and Lifetime Savings Association shows what kind of lifestyle you could have in retirement.

Source: Pensions and Lifetime Savings Association, February 2024, developed in partnership with Loughborough University Research Faculty

MinimumModerateComfortable
Single£14,400 a year£31,300 a year£43,100 a year
Couple£22,400 a year£43,100 a year£59,000 a year
Standard of livingCovers your needsMore financial security
and flexibility		More financial freedom
and some luxuries

Why save into a pension?

Savings vehicles like ISAs offer significant flexibility and are effective means to accumulate wealth for the future. However, pensions possess a distinct advantage: tax relief. Individuals under 75 can enjoy a 25% boost on their eligible pension contributions from day one, as everyone receives 20% basic rate tax relief on their pension contributions from the government.

Moreover, higher or additional rate taxpayers may be eligible for additional tax relief through their annual tax returns. Additionally, any growth within a pension is exempt from Income Tax and Capital Gains Tax, providing further enhancement to your retirement fund.

Because of the favourable tax treatment of pensions, they can be an effective method to retire early. However, it is crucial to remember that from April 2027, it has been proposed that pensions will form part of one’s estate for inheritance tax purposes.

The value of an investment with St. James’s Place will be linked directly to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.

How much does each £2,000 contribution cost you?

Contributing £2,000 monthly into your pension could be more attainable than you realise, largely due to tax relief on your contributions. This estimate is predicated on the presumption that contributions are eligible and that any amount exceeding the basic rate of tax is reclaimed through your annual tax return and subsequently allocated to your pension.

retire early

How much can I pay into a pension?

For most individuals the tax benefits on pension contributions is typically limited to £60,000 per tax year. This include contributions from you, your employer, any third party as well as the tax relief added by the provider. The contributions you make are also limited to 100% of your earnings in the tax year they are paid.

Your Pension Annual Allowance may be tapered if you are a high earner – read more here.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

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.

Seven top tips for boosting your retirement fund to help retire early

1. Start early

It’s undeniably tempting to prioritise immediate financial objectives and rewards, especially when retirement may seem distant.

You might find yourself thinking that you’ll start saving for the future “when I can afford to” or “when I’m earning more money.” However, adopting this mindset carries the risk of procrastination and potentially leaving it too late to prepare to retire early adequately.

The crux of attaining a comfortable retirement lies in saving as much as possible, as early as possible. By embracing this approach, you lay a solid foundation for securing your financial future and ensuring peace of mind during retirement. Starting early could also help you to retire early.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

2. Maximise the use of your Pension Annual Allowance

For most people, contributions are limited to the £60,000 annual allowance. This includes any employer contributions and tax relief applied to your personal contributions. Tax relief on your personal contributions is also limited to the level of your relevant earnings in the tax year, or £3,600 if earnings are lower than this.

To capitalise on their annual pension allowance, an individual with a gross annual income of £200,000 could make a gross monthly pension contribution of up to £5,000.  As an additional rate taxpayer, the tax relief at 45% on these contributions amounts to £2,250 per month.  Their net contribution after allowing for the tax relief is therefore £2,750, equivalent of 16.5% of their gross earnings. This does not factor in any employer contributions that the individual might benefit from.

Starting at 35, investing £5,000 each month, the employee could expect their pension pot to be worth approx. £2,520,000 by the time they reach 55.

Please note that you can currently access your personal pension at 55 but this is increasing to 57 in 2028.

If they started at 45, the pot would be worth approx. £861,000 a decade later.

Based on £5,000 invested each month, increasing 2.5% a year: return 5% a year, compounded monthly, after charges. These figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What you will get back depends on how your investment grows and on the tax treatment of the investment. You could get back more or less.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

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.

3. Give your money time to work

Initiating saving sooner enables your money to remain invested for a longer duration, significantly enhancing the prospects of its growth. This phenomenon is propelled by the power of compound investing, where regularly investing money allows the returns generated to compound over time.

Compound investing serves as a potent tool, wherein the returns you earn have the potential to generate additional returns. Over time, this compounding effect can yield substantial gains, irrespective of the fluctuations in financial markets.

It is also important to consider leaving your pension untouched for as long as possible, even if you wish to retire early, if you have other sources of income or assets.e

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

4. Increase your contributions whenever you can

After initiating contributions to a pension plan, it’s essential to periodically assess and adjust your contribution levels. Simply allowing it to persist at a lower contribution rate may not align with your retirement objectives, or help you to retire early.

Whenever you receive a pay increase, contemplate raising your pension contribution by a corresponding percentage. Even a minor uptick can yield substantial benefits over the long term. Additionally, consider investing bonuses or inheritances as a strategic approach to inch closer to your savings target. Making larger, one-time payments can exert a meaningful influence on your retirement fund when invested over several years.

It’s also worth finding out if you have any unused annual allowance from previous years. Subject to certain limits this could enable you to pay in more than £60,000 in one year and still get the tax benefits on the whole amount. You can ‘carry forward’ unused allowances for up to three years. For instance, in the 2025/26 tax year you can use this year’s £60,000 annual allowance, then anything unused from 2024/25 (£60,000), then 2023/24 (£60,000) and finally from 2022/23 (£40,000), up to a theoretical maximum of £220,000 – provided you were a member of a pension scheme during each of those years, and have the relevant earnings in the current year if making personal contributions.

The value of an investment with St. James’s Place will be linked directly to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

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.

5. Don’t dip into your pension if you can help it

You can usually access your pension from age 55 (rising to 57 in 2028). This is when you can generally take up to 25% tax-free as a lump sum. Many people do, perhaps to pay off their mortgage or make a big-ticket purchase.

However, if feasible, it’s advisable to refrain from accessing your pension for as long as possible, allowing it ample time and potential to grow. Ironically, this may help you to retire early.

Keep in mind that a modern retirement might span 30 years or even longer. This prolonged duration underscores the significance of maintaining your standard of living throughout retirement, which is facilitated by maximising the growth potential of your pension fund.

6. Track down old pensions

Throughout your career, you might work for different employers and accumulate a collection of workplace pensions through various schemes. You may also have some personal pensions, especially if you have been self-employed at any point. You might accumulate several workplace pensions with different employers during your career. Tracking these down may help you to retire early.

It’s not always easy to keep track of your pensions, or for your pension provider to keep track of you. Multiple pension pots from different providers mean you run a much higher risk of losing track of them. House moves are often to blame for this as paperwork is lost and providers not notified.

It adds up to a lot of money. 3.3 million pension pots worth £31.1bn are lost or dormant in the UK.1 That’s money that could be helping people towards a more comfortable retirement. That could include you.

You’ve got a few options for tracking down forgotten pension pots:

Reach out to each former employer with the dates of your employment. They should be able to confirm the pension provider they contributed to for workplace pensions during that period. Ensure you have your National Insurance number handy.

Use the government’s free Pension Tracing Service, which can assist you in finding old employers. Once you obtain their contact information, contact them to request the name of your pension provider and policy number.

If you recall the name of your old pension provider, reach out to them directly. You’ll likely need to provide your name, address, and National Insurance number.

1 Pensions and Lifetime Savings Association, October 2024

7. Review your Pension Plans

Once you’ve gathered a comprehensive view of your pensions, it’s advisable to seek advice.

Understanding how your accumulated pensions will contribute to your desired retirement is crucial. Evaluate the performance of your investments – are they still suitable for your needs? Identify any restrictions or significant benefits you should be mindful of. It’s possible that adjustments may be necessary, particularly if a pension hasn’t been reviewed for an extended period.

You’ve dedicated considerable effort to earning your money. Taking the time to optimise your pension plans can ensure that all your assets are maximising their potential in preparation for your retirement, and can help you to retire early.

The value of an investment with St. James’s Place will be linked directly to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Book a no-obligation review

We’d be delighted to review your existing retirement plans, and wider financial circumstances, to help you retire early, in a tax-efficient way. Book a review with one of our experts today.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time, and are generally dependent on individual circumstances.

SJP Approved xx/xx/xxxx

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Avoiding The 60% Income Tax Trap

Introduction

It’s often thought that the highest UK tax rate is 45% – but that’s not the case.

If you earn more than £100,000 per year, you could be taxed at a rate of 60% on income between £100,000 and £125,140.

Here’s how it works

If you receive income of £100,000 or more, the rate of Income Tax you pay will be impacted by the gradual removal of the £12,570 Personal Allowance (the amount of income you can receive each year without paying Income Tax). The personal allowance is currently tapered away at a rate of £1 for every £2 of income above £100,000.

Once your income is over £125,140, you don’t benefit from any tax-free Personal Allowance whatsoever.

Here’s an example

Let’s say your salary has increased from £100,000 to £110,000. Here’s how the extra £10,000 would be taxed:

£4,000 – the standard 40% rate of Income Tax for a higher rate taxpayer
Plus £2,000 – the additional Income Tax as the personal allowance is reduced by £5,000

That’s a total Income Tax liability of £6,000 on your £10,000 pay rise – or 60%.

Considerations to mitigating this 60% effective tax rate

Make pension contributions

Contributing more to your pension before the end of the tax year is an efficient strategy to lower your taxable income and avoid exceeding the threshold. This approach offers dual benefits: it decreases your tax liability and enhances your retirement savings concurrently.

Consider this scenario: receiving a bonus or pay increase of £10,000 raises your taxable income to £110,000. By using this to make a £10,000 pension contribution you avoid falling into the 60% tax bracket and so both restore your personal allowance and obtain higher rate relief on the contribution.

It’s worth noting that there’s an annual limit on pension contributions that qualify for tax relief, which is typically the lower of £60,000 or your annual earnings. For higher earners, your pension annual allowance might be tapered down further.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Other forms of Salary Sacrifice

If your employer offers salary sacrifice, you can choose to give up some of your regular pay or bonus in return for a different benefit. 

The choice of benefits varies between employers, but often includes:

  • Electric or plug-in hybrid vehicle leasing
  • Childcare vouchers
  • Cycle to work schemes
  • Insurance, including life, health and dental

Your salary is then reduced by the cost of any benefits you choose.

What next?

If you would like to discuss how we can help you mitigate Income Tax liabilities, reach out to one of our experts who can discuss with you your individual requirements.

The levels and bases of taxation, and reliefs from taxation, can change at any time, and are generally dependent on individual circumstances.

The basic rate of tax relief of 20% is automatically applied to pension contributions. You must complete a Self Assessment tax return to claim additional rates of tax relief.

SJP Approved xx/xx/xxxx

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Investment Management

Introduction

By grasping your objectives, investment timeframe, and tolerance for risk, we are equipped to tailor an investment strategy that aligns with your needs.

You can take comfort in the fact that our choices are based on thorough analysis. We aim to build a diversified portfolio for you, integrating an appropriate combination of asset types from various geographical areas through a variety of investment approaches.

This will be carefully adjusted to resonate with your principles, allowing you to concentrate on life’s priorities, knowing that we are diligently applying our investment skills to oversee and safeguard your assets with the greatest diligence.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Curation

Our approach involves confidently steering through the markets for you, adopting a comprehensive perspective on investment opportunities to capitalise on potential gains.

St. James’s Place extensive knowledge of the market and strategic connections enable them to identify, assess, and offer clients attractive and varied investment opportunities.

Our approach to financial and investment management is based on your unique goals. To understand your goals and provide peace of mind throughout your life, we will work with you in three different ways: 

PLAN: When aiming towards longer-term financial goals, such as a comfortable retirement, you’ll need a detailed plan. We’ll work together to agree a plan that works for you. 

DESIGN: After considering your time horizon and attitude to risk, we can design an investment portfolio to match the plan. 

REVIEW: Market conditions change. So can personal circumstances. We’ll keep a close eye on your investments to help them stay on track. 

We hold the conviction that long-term investment, spanning decades rather than days, is the most effective strategy to fulfill your life’s goals.

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo

Fund selection

From the world’s best fund managers

Top-tier investment expertise isn’t confined to a single company or place. In order to optimise the management of your investments, we tap into the abilities of some of the most skilled fund managers globally.

As a Senior Partner Practice of St. James’s Place, our clients benefit from economies of scale and the best-in-class fund managers and products.

Controlled by the St. James’s Place Investment Committee

St. James’s Place engages external supervision in handling your investments. This worldwide network of fund managers and essential strategic partners minimises bias and guarantees diverse investment perspectives. We also have a wide range of comprehensive expertise within our practice.

You can be confident that we will pinpoint the most fitting investment strategies for you, supported by data and analytics. Trust us to balance opportunity and risk, with our sights set on achieving your long-term objectives.

The Investment Committee features independent participants who contribute experience and specialised insight, affirming the integrity of their process and decisions.

St. James’s Place Investment Management Approach

Our Value Assessment Statement examines the benefits you gain from our services, based on the investment management approach.

It outlines the ways we offer value, describes the measures we’ve implemented in the last year, and identifies areas for further improvement.

This initiative underscores our dedication to presenting transparent and equitable details regarding your investments with us.

SJP recognises that no single investment house has a monopoly on investment expertise, so don’t employ in-house investment managers. Instead, SJP carefully select a number of external managers to manage the range of funds. 

This has a number of benefits: 

  • It gives us the freedom to choose from some of the best managers in the world 
  • It means SJP can change a manager at short notice if the need arises, without inconvenience to you 
  • It gives you a real opportunity to diversify your investments by spreading your money across funds managed by different managers with different styles. 

Key to the distinctive approach is the ability to identify and select fund managers from around the world. Contracting out fund management gives greater freedom and the flexibility to source investment expertise on a global scale, giving you diversification and investment expertise that is beyond the scope of many wealth advisers. 

The value of an investment with  St. James’s  Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested. 

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Reforming the UK Resident Non-Domicile regime

Introduction

On 6 March 2024, Chancellor Jeremy Hunt announced in his Spring Budget the government’s intention to reform the UK Resident Non-Domicile regime, into a simpler, fairer arrangement for UK residents choosing to adopt the remittance basis for taxation.

Broadly, from 6 April 2025, individuals in their first four years of UK residence that were non-UK tax resident in the 10 years prior to commencing UK tax residency should qualify for the new “foreign income and gains (FIG) regime”.

For the 2025/26 tax year, individuals who have claimed the remittance basis and are neither UK domiciled nor deemed UK domiciled on 6 April 2025 will only be subject to UK income tax on 50% of their non-UK income arising during the tax year. From 6 April 2026 the full amount of non-UK income will be subject to UK income tax. 

Advice for UK Resident Non-Domiciles

At a glance

  • A one-time 50% reduction on personal foreign income tax for 2025-26 for those losing access to the remittance basis and not eligible for the new 4-year foreign income and gains (FIG) exemption.
  • A re-basing of capital assets to their value as of 5 April 2019 for sales after 6 April 2025 by current non-domiciles who have used the remittance basis, allowing taxation only on gains since that date.
  • A Temporary Repatriation Facility allowing non-domiciles to bring pre-6 April 2025 foreign income and gains to the UK at a 12% tax rate for the 2025-26 and 2026-27 tax years.

What’s changing?

Non-domiciles have their permanent home outside the UK. The existing non-domicile tax regime offers these UK residents a choice to adopt the remittance basis for taxation, allowing them to pay tax on UK earnings as any UK domiciled person would, but only pay tax on their foreign income or gains (FIG) when these are brought into the UK.

The upcoming reform, effective from April 2025, will end the remittance basis of taxation for non-domiciles, introducing a more straightforward and equitable system. New foreign income and gains (FIG) arising from April 2025 will no longer receive preferential tax treatment based on domicile status.

Newcomers with a history of 10 consecutive years of non-residence will receive complete tax relief on FIG for a four-year period of UK tax residency starting afterward, during which these funds can be brought to the UK tax-free.

Those already tax resident for less than four years and qualifying for this scheme will enjoy this relief until their fourth tax year ends. This approach simplifies the process, allowing individuals to bring FIG into the UK without a tax charge, promoting their expenditure and investment within the UK.

For the first three years of UK tax residency, non-doms taxed on the remittance basis qualify for Overseas Workday Relief (OWR), which will continue, albeit in a simplified form, under the new regime.

After the transition period, all individuals, regardless of domicile, who have been UK tax residents for more than four years, will pay UK tax on any new FIG, aligning with the treatment of other UK residents.

This revised scheme is more favourable than in countries without a similar system and competitive with those that have similar arrangements for newcomers.

Inheritance tax (IHT) liability also hinges on domicile status and asset location. Currently, non-UK assets of non-domiciles are exempt from IHT until they have been UK residents for 15 out of the last 20 tax years. The government plans to consult on transitioning IHT to a residency-based system. To ensure certainty for taxpayers, non-UK assets placed into a trust by non-UK domiciled individuals before April 2025 will remain outside the UK IHT regime. The details of the new system’s operation are still under consideration, with plans for future consultation. Read more about Estate Planning & Inheritance Tax (IHT).

To ease the transition to this new, simplified system for current non-domiciles, the government is introducing specific transitional measures, including:

  • A one-time 50% reduction on personal foreign income tax for 2025-26 for those losing access to the remittance basis and not eligible for the new 4-year FIG exemption.
  • A re-basing of capital assets to their value as of 5 April 2019 for sales after 6 April 2025 by current non-doms who have used the remittance basis, allowing taxation only on gains since that date.
  • A Temporary Repatriation Facility allowing non-doms to bring pre-6 April 2025 foreign income and gains to the UK at a 12% tax rate for the 2025-26 and 2026-27 tax years.

While new FIG arising in non-resident trusts after 6 April 2025 will be taxable, FIG generated before this date will remain untaxed unless distributed or benefiting UK residents who have been here for more than four years.

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.

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Access to Specialist Banking and Lending Services

Introduction

As part of our wealth management offering, via SJP’s Private Client team, we can refer you to a range of solutions that have been developed specifically for our clients with more specialist banking and lending requirements. Your adviser will work with SJP’s Private Client team to understand both your current and future needs as well as your servicing preferences, in order to create a solution to your individual circumstances.

Over the years, St. James’s Place has built strong relationships with a panel of carefully selected private banks. The panel comprises boutique banks, offering a range of different specialisms, styles and service levels. We can help you choose the bank that best meets your needs and facilitate the introduction to the bank selected, saving you the hassle and time of searching through a multitude of options.

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo

Services offered

Cash management

By using SJP’s Cash Deposit Service, powered by Flagstone, we can help spread your cash savings to capitalise on market-leading interest rates, and maximise FSCS protection across multiple institutions.

Please note that this is a referral service and the services provided are separate and distinct to those offered by St. James’s Place.

Mortgages

Our advisers can act like a ‘broker’, securing off-market products, and finding lending solutions for your residential or buy-to-let purchases, and provide access to solutions for commercial purchases, as part of your broader financial plan.

Your home or other property may be repossessed if you do not keep up repayments on your mortgage.

Commercial and some buy-to-let mortgages are not regulated by the Financial Conduct Authority.

All enquiries for commercial mortgages will be referred to a service that is separate and distinct to those offered by St. James’s Place.

Investment-backed lending

If you require short-term financing, you may be able to use eligible St. James’s Place and Rowan Dartington investments as security.

St. James’s Place and Rowan Dartington work with Metro Bank to make this short-term lending facility available to you, secured against your investment portfolio.

If the value of the investment falls in relation to the agreed loan facility, the loan may need to be repaid in full. Metro Bank will take a charge over your investments and you will be unable to make any withdrawals from your charged investments without prior approval from the bank. Rates and charges will apply. Please get in touch for full details.

Please note that these services are separate and distinct to those offered by St. James’s Place.

Foreign currency exchange

Whether you’re buying foreign property, sending money to loved ones or moving overseas, we are able to provide access to a currency exchange service provided by TorFX, offering foreign exchange and international payment services.

Please note that this is a referral service and the services provided are separate and distinct to those offered by St. James’s Place.

“Many wealthy clients have complex borrowing needs, which are not well-served by high street banks. We can introduce individually tailored solutions.”

How could a private banking service benefit you?

Through a panel of private banks, we can provide access to a full private banking service offering, via SJP’s Private Client team, including current accounts, deposit accounts, payment services, trustee and executor accounts and foreign currency accounts. More importantly, you will experience a bespoke service, with dedicated bankers and their teams looking after your day-to-day requirements.

The private banks on the panel specialise in truly understanding your individual requirements to ensure you receive a personal and seamless service. Many wealthy clients have complex borrowing needs, which are not well-served by high street banks. Alongside your adviser, our SJP’s Private Client team can review your circumstances and requirements, assess which private bank(s) might best meet these, and seek individually tailored solutions allowing you to choose the option most attractive to you.

These services are available to clients meeting the banks’ criteria, these usually being minimum personal net wealth of £3m to £5m+ and/or annual income in excess of £300,000.

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Estate and Inheritance Tax (IHT) Planning

Introduction

Looking ahead towards estate planning and mitigating inheritance tax (IHT) is key to managing and protecting your wealth, for you and your family. A large proportion of your wealth might be subject to inheritance tax when you die, at up to 40%. This includes assets such as properties, investments, and even old family heirlooms. From April 2027, unspent pensions will also form part of your estate for inheritance tax purposes; requiring a change in approach to estate planning.

Careful IHT planning is all about passing as much of your estate as possible to who you want to receive it, and reducing the inheritance tax liability payable. It’s also about maintaining flexibility and control over any arrangements that are made.

ESTATE PLANNING

The levels and bases of taxation, and reliefs from taxation, can change at any time.  The value of any tax relief is dependent on individual circumstances.

Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills, along with Trusts are not regulated by the Financial Conduct Authority.

Background to inheritance tax (IHT)

The majority of your assets will be subject to IHT if, when you die, the value of those assets exceeds the standard nil-rate band which currently stands at £325,000. If your spouse dies before you without fully using their nil-rate band, any unused percentage can be carried forward to use when you die, subject to a claim being made by your executors within two years of your death.

With the family home often making up a large percentage of an estate, the government has introduced an additional nil-rate band on top of the £325,000, known as the ‘residence nil-rate band’. The current residence nil-rate band is up to £175,000.

This means that if you give away a home that you have lived in as your main home to your children (including adopted, foster or stepchildren) or grandchildren, they won’t have to pay IHT on the first £500,000 (£325,000 nil rate band + £175,000 residence nil-rate band).

If you are a married couple or in a civil partnership then you can combine both your nil-rate bands, meaning that the first £1 million of your assets, including your property, are free from IHT.

The value of all assets in excess of the nil-rate band and the residence nil-rate band will be taxed at up to 40% – paid for by your estate.

However, when the value of an estate exceeds £2 million, the residence nil-rate band is tapered, by £1 for every £2 above this level. You need to consider the value of the estate on each respective death.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is generally dependent on individual circumstances.

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo

Key tax-efficient solutions

Gifting assets

Should you be worried about how Inheritance Tax (IHT) could impact your estate and the wealth you wish to transfer, incorporating a Gift Plan into your wealth management approach might serve as an excellent solution. Our Gift Plan combines an investment bond (either onshore or offshore), with either an absolute or discretionary trust which is controlled by you and benefits those who you want it to.

Assets held within a discretionary trust do not become part of the beneficiary’s estate as long as they remain in the Trust. This plan is versatile, serving various purposes including maximizing exemptions from Inheritance Tax (IHT) or covering educational expenses.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

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.

Trusts are not regulated by the Financial Conduct Authority.

Trusts

A Trust ensures that the correct funds are delivered to the right people at the appropriate moment, offering flexibility, innovation, and control that may not be possible with a Will alone.

It’s understandable to assume that estate planning primarily concerns the distribution of your assets posthumously. However, its scope extends beyond that, encompassing the current organisation of your wealth to enhance its utility, whether for protecting your loved ones or reducing tax implications.

Trusts are not regulated by the Financial Conduct Authority.

Life Cover Plan written into Trust

Over and above gifting sufficient assets to reduce your gross estate value to within £2 million, if you have excess income during your retirement, it might make sense to consider a life cover plan written in trust, to meet the eventual IHT liability, which could be as high as £400,000 on an estate valued at £2 million.

It is important that the life cover plan is written into trust, and that the premiums are paid using excess income, rather than from assets – otherwise, the premiums paid could be treated as a chargeable lifetime transfer (CLT).

Note that probate is required to release estate assets, whereas IHT needs to be paid before probate is granted. By placing a life policy in trust the sum assured will be paid into trust and can be used to meet some/all of the IHT liability. This means the executors will not necessarily need to realise the sale of other assets, such as property and investments, in order to meet the said liability – particularly advantageous if markets are underperforming at the point in time that the sale of assets otherwise needs to be realised.

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.

Trusts are not regulated by the Financial Conduct Authority.

Business Relief

Typically, a trading business is eligible for 100% Business Relief from Inheritance Tax (IHT), allowing it to be transferred to heirs without incurring IHT upon the owner’s demise.

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.

An example inheritance tax calculation

A husband died five years ago, having left all of his assets to his wife. He had not made any gifts in his lifetime. His estate was worth below £2 million.

When his wife dies, her estate includes a property worth £1.2 million, and various other assets such as savings amounting to £1.1 million;

Gross estate value              £2,300,000

Less 2x nil-rate band        -£650,000

Less 2x residence NRB     -£350,000 – £150,000 (Tapering: £300,000/2 = £150,000) = -£200,000 tapered RNRB

Net estate                          £1,450,000

IHT due at 40%                 £580,000

If the couple were able to reduce the gross value of their estate to under £2 million (for example by gifting sufficient assets more than seven years before their deaths), thus restoring their full residence nil-rate bands, the calculation would be as follows;

Gross estate value              £2,000,000

Less 2x nil-rate band        -£650,000

Less 2x residence NRB    -£350,000

Net estate                          £1,000,000

IHT due at 40%                 £400,000

Gifts that are not covered by any of the available exemptions may be taxable where death occurs within seven years if they exceed the available nil-rate band. Inheritance Tax (IHT) payable on those failed gifts may be reduced in the form of taper relief. Taper relief operates by reducing the amount of tax payable not the amount of the gift.

The amount of the taper relief depends on the length of time by which the deceased survived the transfer. If death occurs within 3 years of the gift, then no tapering applies. From year 3 onwards, the tax charge is reduced by 20% for each complete year after the gift is made.

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.

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo

Family Finances and Intergenerational Wealth Management

Navigating the complexities of wealth preservation and transition.

Your financial plan ensures that your assets are not only protected, but also strategically aligned to safeguard your legacy.

Your adviser will craft meticulous plans that honour your wishes and secure the financial future of your heirs, while helping your family to live their aspirations today, ensuring a seamless transition that minimises tax liabilities and maximises wealth preservation.

WHAT CAN WE DO FOR YOU?

Helping you coordinate all aspects of your financial life – so you can focus on what’s important to you.

  • Through SJP’s panel of private banks, we can provide access to a full private banking service offering, including current accounts, deposit accounts, payment services, trustee and executor accounts and foreign currency accounts.

    Please note that these are referral services, and as such the services provided are separate and distinct to those offered by St. James’s Place.

  • Careful IHT planning is all about passing as much of your estate as possible to who you want to receive it, and reducing the inheritance tax liability payable.

  • In the unfortunate event that something severe happens, protection insurance policies, such as Income Protection and Critical Illness insurance, become crucial.

Discover Our Services
YOUR EXPERTS

Meet your team of experienced wealth advisers who specialise in family planning and intergenerational wealth management solutions.

Meet With An Adviser Meet Your Team
Michael Willgrass
Private Wealth Adviser and Head of Adviser Development
View Bio
Angelo Crisafulli
Private Wealth Adviser
View Bio
Kabir Virk
Private Wealth Adviser
View Bio
Richard Thorne
Private Wealth Adviser
View Bio
Shil Shah
Private Wealth Adviser
View Bio
Victoria Trapitsyna
Private Wealth Adviser
View Bio
Tom Markovitch
Private Wealth Adviser
View Bio
Saneka Francis-Lawrence
Private Wealth Adviser
View Bio
Michael Willgrass
Private Wealth Adviser and Head of Adviser Development
View Bio
Angelo Crisafulli
Private Wealth Adviser
View Bio
Kabir Virk
Private Wealth Adviser
View Bio
Richard Thorne
Private Wealth Adviser
View Bio
Shil Shah
Private Wealth Adviser
View Bio
Victoria Trapitsyna
Private Wealth Adviser
View Bio
Tom Markovitch
Private Wealth Adviser
View Bio
Saneka Francis-Lawrence
Private Wealth Adviser
View Bio

Tools & Calculators

Need a bespoke financial plan crafted specifically for your unique requirements?

Get Started

No calculators found

Seeking a tailored financial strategy?

Schedule a consultation with one of our experienced advisers to comprehensively assess and map out your specific financial requirements.

This personalised meeting is an opportunity to delve into your unique financial situation, discuss your goals, and develop a tailored strategy that aligns precisely with what you need for achieving your long-term financial aspirations.

Book A Demo

Protection and Insurance

Introduction

Safeguarding your assets is a critical yet frequently neglected aspect of financial planning. To shield yourself and your family from unforeseen life events, like severe illness or premature death, it’s essential to secure protection insurance.

PROTECTION

“1 in 2 people will develop some form of cancer during their lifetime.” – NHS, Cancer conditions description, 2025

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo

What types of protection exist?

Life assurance

Delivers a lump sum to your family in the event of death, available in two varieties: term assurance and whole of life assurance. Term assurance offers protection for a designated timeframe, while whole of life assurance ensures a lump sum is paid out at the time of death, provided contributions have been consistently made.

Income protection

Intended to provide an income in the event you are unable to work for an extended period due to illness or injury.

Critical illness

Offers a lump sum payment if you are diagnosed with any of a broad range of predetermined illnesses. These can be set up as either term-based or whole of life policies.

Why do I need protection and insurance?

In the unfortunate event that something severe happens, protection insurance policies, such as Income Protection and Critical Illness insurance, become crucial.

Income Protection is tailored to support financial obligations like mortgage or rent payments, utilities, and other household necessities if you’re incapacitated by illness or injury. This type of insurance typically covers between 50% and 65% of your earnings after a predetermined waiting period (often three to six months) and can continue to pay out as needed.

Critical Illness insurance is structured to provide a lump sum upon the diagnosis of specific severe illnesses or conditions.

We often insure physical items like smartphones and home contents more readily than we do the very income that affords these luxuries. Securing your income, lifestyle, and health holds infinitely more value than insuring tangible items. The repercussions of income loss are far-reaching, particularly for the primary breadwinner of a household, impacting both you and your loved ones significantly.

Though the thought is unpleasant, the stress of financial strain during difficult times is an even heavier burden. The real consideration is not if you should obtain protection insurance but rather if you can manage without it, should you find yourself unable to work. This consideration is particularly pertinent for self-employed individuals who lack the protective measures or benefits that employment might offer.

Determining what expenses are most critical to you and evaluating your priorities over something like protection insurance is key. Ultimately, the essence of protection insurance lies in the peace of mind it offers.

Please note income protection insurance plans do not have a cash-in value and will stop if payments to them cease.

Holistic Tax Planning and Optimisation

Introduction

Our proprietary framework involves managing your wealth in the most tax-efficient manner, relentlessly focusing on helping to protect your wealth from erosion by taxes and aiming to maximise post-tax investment returns.

Critical elements
– Tax-deductible strategies
– Tax-advantaged strategies
– Asset sale tax planning strategies
– Cash flow distribution strategies
– Tax implications for estate planning
– Coordination with tax professionals

Our principles
– Utilise all of your family’s available tax allowances, every year where possible
– Arrange your assets in the most tax-efficient manner utilising tax-advantaged investments where appropriate
– Holding dividend and interest-paying investments in tax-deferred or tax-efficient accounts
– Tax-smart wealth distribution strategies, with tax-efficient retirement income withdrawal and estate planning

Every investor is looking for an edge that helps them boost their overall wealth. But one strategy that most investors don’t pay enough attention to is tax efficient investing. The reason?  Even small reductions in tax costs could potentially have enormous consequences for wealth accumulation when compounded over a number of years.

Your goals and personal philosophy towards taxes are unique and may change over time. For many families, income tax planning and estate planning are key components in their financial plan.

Our recommendations are outcome-based, not tax-driven. We allow your goals and values to determine the best tax strategy. Our clients rely on us for comprehensive solutions that take into account annual income and capital gains taxes, inheritance and estate taxes now and in the future. 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 value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

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.

Need a bespoke financial plan crafted specifically for your unique requirements?

Book a Demo
Tax efficient asset location

Optimal asset allocation plays a major role in maximising returns, but many investors overlook asset location – a systematic method for enhancing returns without switching out investments.

This strategy involves placing different types of assets in the most tax-efficient wrappers and investments based on their expected tax impact. The goal? Minimising tax drag and maximising after-tax returns.

Understanding and keeping up-to-date with UK tax regulations can be complex and time consuming. We help our clients by structuring their finances tax efficiently.

With access to a dedicated Tax and Technical team and the Technical Connection division at
St. James’s Place, we are well equipped to devise intelligent tax-efficient investment programmes and help ensure these remain relevant with changing legislation.

As a wealth management firm, we carefully consider the tax implications of dividends, income, and capital gains for each client’s portfolio. The tax planning strategies we use include:
– Matching tax-generating assets with tax-efficient investments
– Offsetting gains with losses whenever appropriate
– Using tax-exempt and tax-advantaged investments as warranted
– Closely monitoring the after-tax return on your investments and reporting taxable distributions to your accountant

Your after-tax return is what matters

Other wealth managers and private banks may report only your investment returns, but they might not be factoring in a key element that could lower what you take home: taxes.  

We believe in using noncontentious tax planning to help you maximise the return on your capital and minimise the impact of all the taxes on your wealth. We work with your professional advisers to help ensure your accountant, personal tax adviser, and solicitor are all working together to develop a long-term plan that is tax efficient.

There are many legitimate tax planning opportunities that are available, which we will advise you on and suggest suitable plans that meet your long-term objectives – this is where our skills really make a difference to you and your family.

Tax-smart wealth distribution strategy

Our tax-smart retirement income strategy is another way in which different components can complement one another by sequencing withdrawals in a tax-efficient way.

A simple withdrawal sequence might involve withdrawing from taxable accounts first and tax-advantaged accounts last, but even more complex withdrawal sequencing strategies can have a significantly greater impact on lifetime spending power. For example, distributing savings that don’t register as taxable income, like tax-deferred withdrawals from an offshore or onshore bond, and distributions from tax-efficient vehicles such as ISAs.

Overall, how these different approaches are combined can make a significant difference when it comes to building wealth over the long term. Each of them can be helpful in and of themselves, but in concert, they can provide much more significant compounded benefits that can really move the needle. We help you by maximising the use of government allowances, so you can have the lifestyle you deserve;
– Taking a tax-efficient retirement income
– Helping to reduce your Inheritance Tax Bill (IHT)

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected, and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us

Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Close Search
Suggestions
Popular searches

Should you require more information or have particular questions, we invite you to contact us at your convenience.

Contact Us
POPULAR SERVICES
WHO WE HELP

Email To Myself

Close

By submitting your details you give consent for Apollo Private Wealth to reach out for marketing purposes. You may unsubscribe at any time.

Apollo Private Wealth together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see our Privacy Policy or the St. James's Place Privacy Policy.

Book a Demo
Close

Your wealth is our priority.