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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Trusts for particular purposes: employment-related trusts - educational trusts

An employer may set up an educational trust (sometimes known as a scholarship trust). This could provide scholarships for members of the families or households of employees. It is normally a discretionary capital settlement.

Action on learning of a new educational trust

Use the tracing function to see if a trust office has a record for the trust.

If there is no record issue a 41G (Trust). Do not get a copy of the trust document. Ask the trustees for the following information.

  • Has the trust received income or acquired chargeable assets?
  • If not, is it likely to do so in the future?

Pass the completed form and information to the appropriate trust office (TSEM1420) to take the following action.


Appropriate trust office: answer to both questions is ‘no’

If the answer is ‘no’, to both questions, advise the trustees they do not need to complete annual returns. Also remind them of their obligation to notify any future chargeability to tax (TMA70/ Section 7).

The instructions in the SA Manual are at ‘records/ set up taxpayer records/ when to set up a trust SA record/ new trusts with no income bearing assets’.


Appropriate trust office: answer to a question is ‘yes’

If they answer ‘yes’ to either question deal with as a new employee benefit trust (TSEM5050).