Agoodison1991

Hello, I have a query and I can’t seem to find answers online. Please see the below scenario: A grandfather decides to setup a bare trust for his granddaughter so he can gift her some money. He is the settler and his granddaughter is the beneficiary. As far as I’m aware, the “parent settlement rule” doesn’t apply here as the settlor is a grandparent - meaning all income from dividends will be paid on behalf of the beneficiary with their own tax free allowance. But say in the future, the girl’s parents want to also contribute some money of their own to the trust as a gift for their daughter. How does this affect the trusts tax obligations? Would the tax then have to be split - for example any dividends paid from investments purchased using the grandfathers gift get filed in the beneficiaries tax return. But any dividends paid from investments purchased using the parents gift would fall into the parent’s own tax return (if gains exceed £100). Does that make sense? And is this possible? Or would two separate bare trusts need to be created, one with the grandfather as settlor and another seperate trust with the parent as settlor. Hope someone can shine some light on this please. Thanks