Tax and children's investments

[cassa333]

As an example can anyone tell me if you can claim back tax.

Your children have a sum of money tied into a trust until they are 21yrs (15yrs to go).

The trust (however it does it I don't know) pays 50% tax on the interest. Is there a way to claim back the tax on behalf of the children? or do you just have to shop around and find one that pays less tax to start with?

Or do you think this is a missinformation?

50% tax seems too much for a childrens trust!!!

Thank you.

[dzug2]

The trusts tax rate is set by HMRC, not the trust itself. Chancellors don't tend to like trusts.

[cassa333]

Can it be claimed back though?

And if not what is a better place to put it in that acts like a trust ie: keeps it 'safe' for 15yrs?

[factor-fiction]

If it's in trust for them then I doubt you have any entitlement to make any changes as it's not your money, unless you are a trustee.
However that's an uninfomed view- we need a trusts expert.

[dzug2]

The trust may well have powers to invest it differently - but it won't affect the tax position.

Where does the income go? Accumulated in the trust or paid out? For the former you won't get the tax back - for the latter I'm a bit uncertain but it may be possible, or at least some of it.

[buildersmate]

For such an in depth financial taxation question you could try this website.
http://www.taxationweb.co.uk/
I have used it from time to time with good answers being provided.
I don't understand too much about trusts either. The Chancellor/HMRC don't like them in general because they can be used by the wealthy to shield income from tax. However there can be very good reasons why a child could have a trust fund established that are unrelated to tax avoidance - inheritance following death of a parent or as part of a divorce settlement, say.

[cassa333]

Thanks for your replies.

Granny left my 2 £59k each when she died. Decause of the executors bogup they are only (ha ha only ha ha ha) getting £46k each to be kept in trust until they are 21.

I obviously want them to get as much out of it as possible and rather resent them having to pay 50% tax on interest when even the interest won't amount to much.

[buildersmate]

That's a pity.
This is on the edge of what I know, and its too late now anyway I suspect, but there is a difference between an executor holding a deceased's assets in trust and setting up a specific trust. I had understood in most cases there is no obligation to do the latter and the executor(s) can continue hold onto an asset for as long as they see fit. In that situation income (or indeed capital gains) arising from profits in the executors account are due to pay tax, but not at a 50% rate.

[cassa333]

The latest news on the trusts is that she has decided to put them in offshore trusts of some sort to save on the tax. Something was said about the fact she is getting everything signed of for due dilligance etc so that she can't be held responsible if it all goes pairshapped. That shoud read so I can't hold her responsible!

I hope she has put her twos in the same trusts...