Question:
I have heard of people using dividends or trusts to pay for schools fees for their children. In most of the cases the owner managed a limited company. Surely you fall under the ‘settlements’ legislation if you give shares to children or set up some form of trust?
Arthur Weller replies:
The settlement legislation (ITTOIA 2005, s 629) says that if an unmarried child under 18 receives income of more than £100 per year from an asset gifted to them by a parent, then the income is treated as the income of the parent and taxed accordingly. However grandparents are not included in these rules.
