School fees funding from unencumbered equity?

I believe that regular payments can be made without an inheritance tax issue as long as they are regular and from income. You could also set up a discretionary trust and the grandchildren as beneficiaries could set their personal allowance against this. (The trust pays tax at a higher rate first, but then the beneficiaries get a refund). Transferring the property into a trust may incur stamp duty and I don’t know if you would have CGT implications. You can’t be a beneficiary, so you would not have the capital, although you could control which of the beneficiaries received the income each year. I am not qualified to advise, so I really would suggest that you ask an accountant or tax advisor.

You really need good, informed advice on something like this from a professional to ensure you take the best option to achieve your overall goals. If you don’t want to reduce your personal income by using your rental returns to cover the costs you could presumably remortgage as you suggested, but you would not be able to claim any tax relief on the interest as the capital raised wasn’t being used for business purposes. This may still be preferable to you, but there’s a possibility it could have other unforeseen implications. This is a good article. https://www.taxcafe.co.uk/resources/thetendertrap.html

A colleague of mine had a similar dilemma and after consultation it was decided that his Company pay the schooling fees and claim the full cost against tax.
The important thing is that once there schooling is complete they commit to working for the Company for a minimum 6 months..The same way any Company pays for training any of it’s workforce.

Reply to the comment left by Kate Mellor at 03/05/2022 – 09:10
Thanks Kate.
A very interesting article that I will take time to fully understand.
Appreciated

Reply to the comment left by Paul Cartwright at 03/05/2022 – 13:07
Wow! Hadn’t heard of that one before.
Thank you

Reply to the comment left by Paul Cartwright at 03/05/2022 – 13:07
Not sure how a 5 or 11 year old could legally agree to such an arrangement. I suspect the expense was not clearly detailed in the accounts, or the accountants worked on the basis that the old days of every set of accounts being “examined” are long gone.

Reply to the comment left by Paul Cartwright at 03/05/2022 – 13:07
Hi Paul
Wud your colleague mind sharing the basis of that advice or the details of the consultant who provided that advice?

Also b interested to hear what our 2 Mark’s have to say on this one.