Property trust

[Herbs16]

The trust was set up by the grandfather for the benefit of his grandchildren to pay school fees; I presume therefore this therefore becomes non taxable when completing the trust return

[maths]

The beneficiaries are his 3 young children.

The trust was set up by the grandfather for the benefit of his grandchildren

??

[AnthonyR]

The trust was set up by the grandfather for the benefit of his grandchildren to pay school fees; I presume therefore this therefore becomes non taxable when completing the trust return

Assuming the Grandfather set it up, the income in the trust is still taxable at 45%. Discretionary trust income is always taxable. However that tax can be reclaimed by the grandchildren if their gross income (after adding the trust income and tax credit in) is within their personal allowance.

BUT was it really settled by the grandparents? If the parents provided the initial settlement to the Grandparents this may still be caught.

As mentioned above, you should really have your colleague speak to a tax advisor that understands trusts before they create a big tax problem.