‘Gift And Loan’ Trusts

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‘Gift And Loan’ Trusts

By Malcolm Finney, March 2019
Despite the availability of an inheritance tax (IHT) nil rate band (currently worth £325,000) and the recently introduced residence nil rate band (worth £125,000 for the tax year 2018/19), IHT arising on death at 40% is somewhat penal; in particular, when it is appreciated that much of a person’s death estate has itself been subject to tax in one form or another, be it income tax and/or capital gains tax.

Growth in the value of assets owned during lifetime, which then form part of a person’s death estate, only exacerbates any resultant IHT charge.

Inheritance tax mitigation
Various options exist with a view to mitigating IHT on death, with gifting away in a lifetime being perhaps the easiest and most common, although not always a viable option. The ‘gifts with reservation’ anti-avoidance provisions generally act to preclude the gifting of one’s residence in which one
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