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The parents reclaim income tax deducted from trust income distributions for the children up to the amount of the personal allowance and tax deductions in excess of each child's marginal rate.
My question is can the parents withdraw money from the children's accounts and spend it on their minor children's education e.g. school fees or maintenance such as clothing cost of child-minders etc. without any income tax implications? Readers' views are welcomed.
Query T17 019 — Mary P.
Reply by Digby Bew:
On the face of it the arrangements made are likely to be categorised as 'bare trusts' for tax purposes; ie each child has an immediate and absolute entitlement to both the income and capital of the deposited funds and that entitlement is not subject to any contingency. However one would need to review the terms upon which the funds were...
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