Yahoo Finance St James’s Place investigates firm ‘selling private school fees tax avoidance scheme’
The UK’s largest wealth manager St James’s Place is investigating one of its financial advice firms after it appeared to be promoting tax schemes to help parents save on school fees.
Apollo Private Wealth, a London-based partner firm of St James’s Place, published a post on LinkedIn last month advertising a guide for setting up a “tax-efficient fund for your child’s school fees”.
The Apollo guide implies parents can pay private school fees using trusts.
But the post has since been deleted, and the firm’s website is currently down for “maintenance”, after experts suggested the scheme could be in breach of tax rules.
A St James’s Place spokesman said the firm had begun an investigation.
He said: “We are currently investigating this matter, which relates to one of our individual partner practices, Apollo Private Wealth.
“While we work with clients to consider the tax efficiencies of their financial plans, St James’s Place only endorses the use of schemes that comply fully with HM Revenue and Customs rules.”
The tax office published a notice on its website in June saying it was “aware of a tax avoidance scheme being marketed as a tax planning option available to help fund the cost of education fees” targeting company directors.
It added: “HMRC’s view is that this scheme does not work.”
Telegraph Money then revealed in July that HMRC was investigating a number of accountancy and tax firms promoting schemes aimed at helping to cover the rising cost of private tuition.
This paper found a handful of firms that appeared to be offering schemes to families, with some claiming their “tax-efficient structure” could help reduce the cost of private school fees by more than half.
The schemes broadly work by diverting assets, such as company dividends, into a bare trust, the beneficiary of which would be their child. They would then use their child’s tax free allowances to reduce the tax paid.
It is understood the taxman is concerned families are increasingly seeking out, or being sold, these schemes as private school fees rise to record levels, with average boarding fees now costing parents around £39,000 a year per child.
Families caught using these complex tax avoidance measures to save on school fees face paying significant financial penalties to the tax office – typically thousands of pounds – if they are deemed to be in breach of tax laws, and will have to repay any tax they have previously avoided.
A HMRC spokesman said: “We are aware that tax avoidance schemes to fund education fees are being promoted and it is highly likely to see users pay more than they’re trying to avoid. If anyone thinks they may already be involved in this scheme, we urge them to withdraw and to contact us.”
