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School fees paid from trust via parent

School fees paid from trust via parent

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Client has set up discretionary trust for education of grandchildren. Source of funds was money left to client but was diverted to this trust by deed of variation. Trustees are client, spouse and son (father of the grandchildren)

Trust has made payment to the son who has then paid the school fees which exceed payment from trust. Will HMRC deem this to be income of the son?

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By LyneT
27th Jun 2011 22:13

yes

This will be a payment of income to the child provided that there is sufficient income within the trust to cover the income.

If there is sufficient accumulated income there will be a tax credit attatching to the payment which the child can reclaim. ie the tax credit from the pool

 

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Della Hudson FCA
By Della Hudson
30th Jun 2011 13:28

Thanks Lyne

Just to clarify that income is taxed on child and not on father (who received income then paid fees).

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