HC Deb 06 April 1987 vol 114 c75W
Mr. Nicholas Baker

asked the Chancellor of the Exchequer if he will bring forward legislation to remove the difference in tax treatment of students supported by grants and students supported by parental contribution while on higher education courses.

Mr. Norman Lamont

In the normal way there is no difference in the tax treatment of students who receive grants either from their parents or from local authorities. Local authority maintenance grants to students are not liable to tax; nor are ordinary — non-covenanted —parental contributions to students' maintenance.

If the parent makes his contribution in the form of payments under a deed of covenant, the tax position is that the parent normally obtains tax relief for the payments by deducting basic rate tax from them. The payments form part of the student's taxable income, and by setting his personal allowances against them he may be entitled to repayment of the tax deducted at source.