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Inheritance Tax Solutions - Enhanced Discounted Gift Plan

Enhanced Discounted Gift Plan

How can I protect my assets from Inheritance Tax but still have an income to live on and save Inheritance Tax as quickly as possible (preferably earlier than waiting 7 years)?

Client Circumstances

  • Ms Murphy’s assets exceed the IHT exempt amount by £200,000
  • Life expectancy calculators indicate she is likely to live for a further five years’
  • She requires £10,000 per year on which to live
  • If she does nothing, the IHT bill will be £80,000

Recommended Solutions

  • Invest £200,000 into an Enhanced Discounted Gift Solution.
  • This is split £50,000 in the Discounted Gift Plan and £150,000 in a Separate and Specific Inheritance Tax Plan

Benefits from advice given

  • The Discounted Gift Plan portion benefits from 100% IHT relief immediately
  • Ms Murphy draws £10,000 per annum for 5 years
  • After 2 years the Inheritance Tax Plan element is also 100% exempt from IHT
  • Ms Murphy actually lives for 7 years. For the final 2 years of her life (the Discounted Gift Plan is exhausted) she draws income from her Inheritance Tax Plan investment
  • All money in the Inheritance Tax Plan investment remains outside her estate for inheritance tax purposes (after 2 years) and therefore her estate pays no IHT on death
  • The Inheritance Tax Plan investment can be accessed if Discounted Gift Plan funds exhausted
  • Total IHT saving after 2 years, £80,000
  • Investment objective is 3.1% net targeted return from the Inheritance Tax Plan investment

Enhanced Discounted Gift Plan


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Future Servicing

We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.

This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.

IHT Solutions Helper Will you have to pay Inheritance Tax?

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