Discretionary trust paying school fees

Where a trust has not been set up and assets remain within the settlor’s estate, The settlor may currently be paying school fees net of income tax, which is not recoverable. Therefore, by placing the income producing assets into trust they are able to make the provision of school fees more tax efficient. Back to school : how estate planning and gifting can help school fees. Independent education fees are not cheap.

These investments can pay out an income through interest earned or dividends, which in many cases can be timed to match school fee. A good education can come at a cost.

The average independent school fee rose 3. Do grandparents pay school fees? Are trusts tax deductible? What are discretionary trusts? Discretionary trusts. These are where the trustees can make certain decisions about how to use the trust income, and sometimes the capital.

I have two kids at private school and my parents want to pay the fees for a few years. I will be one of the trustees of the trusts and so the plan is that each term I remove some funds and transfer over to the school.

I have started acting for a client who is trustee of a discretionary will trust set up by his father for the benefit of the grandchildren. This is of course fine, but my query is a tax one. The fees amount to over £10p. With a discretionary trust the trustees decide who should benefit and when, so the adviser suggests that Stephen and Sarah are appointed as additional trustees, as they are aware that the investment is intended for school fees. The transfer into the discretionary trust is a chargeable lifetime transfer but, as John and Elizabeth have not made any previous transfers, each can gift £32000.

But the fees in advance scheme means they nothing and the parents and the school then split the benefit. In return for paying upfront the parents are given what the schools class as a discount. The Tax Doctor: Investments offers school fees trust tax solution. A discretionary trust of non-income producing assets is the most efficient way Stephen and Hannah can assist their children while. Trusts for School Fees.

The distinction between interest in possession trusts and discretionary trusts is important for income tax purposes. The trustees of an interest in possession trust are subject to tax on trust income. The beneficiaries in turn are subject to tax on their share of their income from the trust , with a credit for tax paid by the trustees on that.

The private school fees are then paid by paying out dividends to the children. For this tax year that is £15p. Offshore bonds are a very useful, but often overlooked method for funding private school fees. The structure of a discretionary trust enables you, as the person putting your assets or money into the trust (known as the settlor), to give those assets to a group of people chosen by you (the trustees) to look after.

It is possible to gift a buy to let property investment to a child.

In the majority of times, you will pay Capital Gains Tax (CGT) when passing a buy to let property to a child. However, using a trust wrapper allows you to use your IHT lifetime allowance rather than being charged CGT. If you are paying school fees via a monthly direct debit, the payment due on 6th April is the fourth spring term payment.

The reduced payments outlined above will start from May for those on monthly direct debits, and from mid-April for those paying termly.