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HMRC internal manual

Employment Income Manual

Benefits: scholarships provided for members of the family or household of a director or employee: identifying and recording educational trusts


An educational trust will normally be a discretionary capital settlement to which theprovisions of Section 686 ICTA 1988 apply.

Follow the guidance at TSEM5175 as regards theaction to take on learning of a new educational trust.

The reply will advise the trust office whether or not the trust counts as an educationaltrust. If it does the trust office will be sent an additional copy of the ruling on thetax treatment of the trust. This additional copy should be forwarded to the office dealingwith the PAYE scheme of the employer named first in the trust deed.

Copy rulings received from the trust office should be filed in the employer’s file (133M).At the same time the employer’s name and PAYE reference should be entered in anestablishment file (133K) headed ‘Educational and Scholarship Schemes’.

If you find scholarship awards being made by a foreign trust obtain the title documentsand submit them to the Centre for Non-residents.