Bare Trust & Family Income for Maintenance Grant Implications

Stu_the_Canary

Hi

I have a Bare Trust account that will be transferred to my Godson shortly (Approx Value £6,500). His father was concerned that the whole value of the Bare Trust would count against the Family income calculation for Maintenance Grant purposes. Looking at the HMRC website I think it would only be any INCOME from that Trust that would count for these purposes and not the whole of the Trust value in the year that it is assigned over to them.

Any thoughts/advice please?

Many thanks in advance

xylophone

If this is a bare trust with your nephew as the sole beneficiary, then the capital and income has always belonged to (and been taxable on) your nephew.

In this case, the income is the interest/dividends that have arisen on the capital.

If the grant is calculated on all income received by any member of the family (is it?) in the tax year the application is made, then the interest/dividend received in that year would need to be counted.

But are you sure that this is the case? 

What exactly does the application form and notes say?

Reaper

I believe maintenance grants ended in 2016 and were replaced with maintenance loans. Assuming that is what you meant...

The income earned each year from the Bare Trust was assigned to the child each year for tax purposes (in practice the child does not normally need to pay anything as they have the full adult tax allowances).

So what counts this year is purely the interest/dividends earned this year, not over the lifetime of the Bare Trust nor the capital they are taking control over.

silvercar

Are you talking about student finance? Or maintenance grants for something else? 

If student finance, are you in England, rules are slightly different depending on which home nation your godson lives in.

If we are talking about student finance, the maintenance loan is based on parental household income. Income of the student is generally excluded.

DavidT67

Despite how the Student Finance England forms are worded, you only need to consider taxable income, not gifts or withdrawals of capital. Basically, if you wouldn't list it on a self assessment form and be taxed on it, don't list it on SFE financial assistance form.