August 2025

Aug 28

Behind the scenes at FAS – an update

By FAS | Financial Planning

In our weekly Wealth Matters newsletter, we try to keep our readers up to date with developments in financial markets, changes in legislation and financial planning opportunities. In a break from our usual content, we ran a series of articles last year giving an insight into how FAS operates on a day-to-day basis, which proved popular, judging by the feedback we received. Twelve months have passed since the publication of our initial “behind the scenes” articles, and as FAS continues to grow, we would like to bring you up to date with recent developments within the business.

2025 – a busy year!

2025 thus far has proved to be an incredibly busy year for FAS, with the team expanding, and internal systems evolving to continue to meet the highest standards of service. Whilst the business was already growing rapidly, the pace of growth has accelerated even faster this year. It is clear there is an ever-greater need for individuals and businesses to seek independent, professional financial advice. A key driver of this has been the various changes in legislation affecting a range of UK taxes, and an increased awareness of the need to ensure that pensions and investment plans are appropriately managed and reviewed. We have also seen a greater call from clients for individual and tailored advice to ensure that family wealth can pass between generations, reducing or eliminating an Inheritance Tax liability.

To deal with the increased demand, we have expanded our team by 30% over the last twelve months. The adviser, paraplanner, compliance and administration teams have all been strengthened, with experienced and dedicated team members helping to enhance the levels of service we provide to clients. We strongly believe in a collegiate and collaborative approach to our work. All staff are integral to the running of the business and there is a mutual respect amongst colleagues for the role everyone plays.

The team are based within our Folkestone and Maidstone offices, and we believe working closely together in an office environment promotes more efficient administration, and amongst the adviser and paraplanner teams, encourages discussion around planning opportunities, and the outlook for investment markets. Being office based ensures the combined years of experience across the adviser team can work together on complex financial planning scenarios, together with input from our highly qualified and experienced paraplanners.

Growth in the business continues to be fuelled by the client referrals we receive. Many existing clients have been kind enough to pass on our details to friends, family, and colleagues, which is the best compliment we can receive. We also regularly receive referrals from professional firms across Kent, London and the South East, who trust FAS to provide their clients with bespoke financial planning advice.

Procedural upgrades

FAS has not only invested in additional personnel over the past year. We have also continued to invest in technology over the last twelve months, to improve the service we provide. One key enhancement has been the increased use of digital signature systems, which allow clients to electronically sign application forms and declarations. Electronic signatures not only avoid postal delays and ensure rapid processing, but many clients have also commented that they find digital signatures far more convenient. We have also introduced new software solutions that provide detailed cash flow analysis, which help support our retirement planning recommendations.

The FAS Investment Committee work continues to evolve, with enhancements to our research, methodology and investment process. Committee members now schedule more frequent meetings with leading fund managers and have access to a wider range of research and analysis, which continues to expand. The FAS Investment Committee also now provides more regular updates on investment performance and strategy and undertake enhanced analysis to compare investment performance against market peers. The analysis also reviews the open market to ensure that our investment functions provide value for money. In addition, FAS have negotiated fund discounts with leading fund houses, passing on lower fund costs to our clients.

Chartered Status and the Community

FAS is proud of our Chartered status, which is a mark of distinction which signifies a public commitment to professional standards and technical competence. Continuing professional development, whether through further examinations, or regular targeted learning and study, is undertaken by all staff throughout the year. We are fully cognisant of the rapidly changing financial planning landscape and continue to evolve the professional development programme undertaken by the team to meet these challenges.

Links with the local community have also been strengthened over the last twelve months. FAS are a sponsor and key supporter of the Kent Charity Awards, which recognise the amazing work undertaken by local charities. In addition, FAS sponsor the Kent Life Food & Drink awards, and this year, we are also a lead sponsor of the Kent Law Society. We remain proud to be able to support these local events and organisations.

Into the future!

Whilst 2025 has been a year of rapid growth for FAS, we will not lose sight of our core ethos, which prioritises client relationships and focuses on providing quality advice and exceptional service. We are also acutely aware of the need to avoid complacency and will continue to invest in our team and systems to meet growing demand over the months and years to come.

We hope this update has been of interest. We always welcome feedback, so please do get in touch if you have any questions or comments.

Aug 14

Planning for the costs of education

By FAS | Financial Planning

As a new academic year begins, families turn their attention to the rising costs of education. Whether saving for university costs or funding private schooling, early planning can make a significant difference. We are increasingly seeing grandparents and other older relatives who wish to help fund education costs of younger generations, easing the financial burden on their children, and undertaking Inheritance Tax planning at the same time. With the right planning, this can be an effective and tax-efficient strategy.

The cost of private and further education

For some families, investing in a private school education is a priority, with evidence showing that students from private schools often outperform national academic averages. However, private education comes at a significant cost – not only in terms of school fees, but also when factoring in uniforms, extracurricular activities, trips, and other associated expenses.

Private education fees were a hot topic of debate last year, after the Government’s decision to impose VAT on school fees from January 2025. The average cost of an annual independent day school place is around £18,500 per annum, and the imposition of VAT on fees only increases the financial burden on parents. In addition, recent reports suggest HMRC are reviewing cases where parents made advanced payments to schools, to determine whether these payments are also liable to VAT.

University education comes with a substantial price tag. Tuition fees are subject to a cap of £9,535 per year in the UK, which means a typical three-year degree could result in over £28,000 of student debt being accumulated for tuition alone. Additional costs, including accommodation, food, travel, course materials, and entertainment, significantly increase the financial requirement. While Tuition Fee Loans cover course fees, Maintenance Loans, which are means-tested based on household income, rarely cover the full cost of living. For the 2025/26 academic year, Maintenance Loans have risen by just 3.1%, leaving a widening gap that families often need to fill themselves.

For those starting courses since August 2023, student loan repayments only begin once earnings exceed £25,000 per year; however, interest applies to the outstanding balance, with the rate of interest linked to increases in the retail price index. This means that the debt does not erode over time due to inflation, which is the case with other debt, such as mortgage loans.

The burden on parents

Parents looking to help their children through further education may well find that this comes at a time when they may also be focusing on other financial priorities, such as retirement planning and maximising pension contributions. Balancing these competing goals can present a challenge; however, starting to save well in advance of a child entering higher education allows families to spread the cost over a longer period and potentially reduce the financial pressure later.

For longer term investments, leaving savings on cash deposit is likely to see the value of those savings erode in real terms. Choosing an investment strategy that reflects the investment time horizon and holds a diversified portfolio including global equities and bonds could generate higher returns over time, albeit investment risk also needs to be considered.

Tax efficiency should form an important part of the planning process. Sheltering investments within an Individual Savings Account (ISA) wrapper could provide tax-free growth and income. The exemption from Capital Gains Tax offered by an ISA can be particularly helpful when withdrawals are taken to cover fees that become due.

Help from older generations

Grandparents and other older relatives often wish to contribute towards school and university costs, both to invest in their grandchild’s future, while also reducing the financial pressure on the parents. At the same time, we are seeing many people actively consider the potential Inheritance Tax liability that could be due on their estate, particularly given the upcoming change to legislation that will mean that unused pension funds become liable to Inheritance Tax from April 2027. For older relatives, gifting money for the purposes of funding education costs can, therefore, not only help younger family members, but also reduce the potential liability to Inheritance Tax.

In these cases, it is important to carefully consider how best to help fund expenses in the most tax-efficient way possible. Annual gifts of up to £3,000 are typically exempt, but larger capital gifts may be subject to Inheritance Tax unless the donor survives seven years from the date of the gift.

The benefits of arranging gifts out of surplus income are often overlooked. These rules are not straightforward; however, if income earned by the donor is truly surplus to expenditure, regular gifts of surplus income could be a method of contributing towards the cost of education without concerns that the value of the gift could be clawed back if the donor fails to live seven years.

For more advanced planning, a Discretionary Trust, with the grandchildren as potential beneficiaries, could be an alternative way to build a fund to cover education expenses. Grandparents could settle funds into Trust when grandchildren are young and invest with the aim of growing the fund over time. Once grandchildren need funds for education fees, the Trustees can release funds tax-efficiently, to cover ongoing educational expenses as they arise. Discretionary Trusts have wider applications than funding education costs and can be a powerful tool for wider estate planning and protecting family wealth.

Start planning early

Whether covering the costs of university or private school fees, the best way to meet education costs is to start planning as early as possible. By putting a structured and tax-efficient strategy in place, you can help ensure that your children – or grandchildren – have access to the educational opportunities you want for them. For older generations, such planning can also have the dual benefit of reducing a potential Inheritance Tax liability.

Our experienced advisers can provide independent and holistic advice on how best to fund your family’s education expenses, and how to reduce a potential liability to Inheritance Tax. Speak to one of the team to start a conversation.

Aug 07

IHT planning through Business Relief

By FAS | Inheritance Tax

Inheritance Tax (IHT) planning remains a central focus in many financial planning discussions, especially for individuals and families seeking to preserve wealth across generations. A common concern among clients is ensuring that as much of their estate as possible is passed on to loved ones, without being subject to IHT. At the same time, clients often express the wish to retain a degree of flexibility in their planning, enabling them to adapt their arrangements as their circumstances change.

One solution that can offer both tax efficiency and a flexible approach are investments that qualify for Business Relief. Whilst these strategies can be a valuable tool for IHT mitigation, significant changes announced in the October 2024 Budget will impact how Business Relief can be used from April 2026 onwards.

Business Relief basics

Business Relief was first introduced under the Finance Act of 1976. Its purpose was to alleviate the pressure placed on family-owned businesses where, historically, the imposition of IHT on death forced families to sell the business to meet tax liabilities. Over time, the scope of Business Relief was extended to include not only unquoted trading businesses, but also certain companies listed on the Alternative Investment Market (AIM), which is an alternative UK stock market for small and medium-sized innovative companies.

To benefit from Business Relief, shares held must meet specific criteria. The shares must be in an unquoted trading company or a company quoted on AIM and must have been held for at least two years before the investor’s death. In addition, the company in which the shares are held must be actively trading and not primarily involved in investment activities. This means that rental property companies are unlikely to qualify for relief. Finally, excessive cash reserves or non-trading assets held by the investee company may disqualify it from relief, as HMRC may interpret it as an investment rather than a trading business.

Accessing Business Relief through managed solutions

Most individuals are not directly involved in owning or running qualifying businesses—and may have no desire to do so. To bridge this gap, the financial services sector has developed a range of investment solutions that allow investors to access Business Relief investments through managed portfolios, providing the same tax advantages without the need to be operationally involved in a business.

Most managed solutions invest funds in a broad range of different qualifying trades, which focus on asset-backed investments, such as renewable energy facilities – for example wind, solar and hydro power generation – storage and warehousing, commercial property rental and forestry. They generally target modest returns, say between 3% and 5% per annum, which if achieved, would provide an element of inflation proofing.

While these asset-backed businesses can provide more stability than traded equity-based investments, they also carry certain risks. Notably, such investments are unquoted, meaning there is no public market to trade the shares. As a result, they are less liquid and may be more difficult to value or sell quickly. Investors must understand these risks as part of the broader decision-making process.

Flexibility and control

One of the standout benefits of Business Relief investments is the control retained by the investor. This sets Business Relief apart from other IHT strategies such as outright gifting, as the investments remain in the individual’s name and under their control. This means that if the investor’s circumstances change—such as the need for long-term care or unforeseen expenses arise—they can redeem the investment, subject to availability of liquidity. This makes Business Relief solutions particularly attractive for clients who want to plan tax-efficiently without fully relinquishing access to their funds.

Major reforms to Business Relief

The October 2024 Budget introduced significant reforms to Business Relief, due to take effect from April 2026. These changes will have meaningful implications for estate planning strategies and may lead investors to revisit existing plans.

Currently, assets that qualify for Business Relief are eligible for 100% relief from IHT. From April 2026, a new cap will apply, where the first £1 million of qualifying business and agricultural assets will continue to benefit from 100% relief, and any qualifying assets held above £1 million will receive only 50% relief, meaning the effective IHT rate will be 20% on the excess. This £1 million limit applies on a combined basis to Business and Agricultural Relief, and will remain fixed until 2030, after which it will increase in line with inflation.

Currently, qualifying shares listed on the AIM market receive full (100%) relief; however, from April 2026, the relief on AIM shares will reduce to 50%. According to HMRC data, the total IHT relief attributable to AIM shares in 2021/22 was approximately £185 million. The updated policy may, therefore, raise just £90 million of tax revenue per year, which leads us to question whether the disruption to investors is proportionate to the financial benefit for the Treasury.

Investors with significant AIM holdings must now consider whether the reduced tax efficiency justifies restructuring their investment portfolio. While recent AIM performance has been underwhelming, these shares may still offer long-term growth potential and merit inclusion depending on an individual’s risk profile and objectives.

The Importance of a holistic approach

Whilst this article has focused on Business Relief, and changes to the rules from next April, this solution is only one of a range of options that can be used to mitigate a potential IHT liability on death. By taking a holistic approach, tailored to your individual circumstances, our advisers can consider other options, such as gifting, the use of trusts and insurance products, as alternatives to Business Relief. Often when dealing with complex IHT planning needs, a combination of more than one of these options can provide the correct balance between tax efficiency, control, and risk.

Speak to one of our experienced advisers to discuss the implications of IHT on your potential estate and to discuss ways to reduce, or indeed avoid, a tax bill on your death.