Gift Scheme

The Gift Scheme allows a person (the donor/settlor), who does not need continuing access to their capital, the opportunity to reduce the potential inheritance tax (IHT) liability on their estate by making a lifetime gift for IHT purposes. The gift is invested in a bond by the trustees, or it may be possible for the donor/settlor to assign an existing investment bond to the trustees.

  • It provides a potential reduction in the value of the donor/settlor’s estate for IHT purposes.
  • The entire gift will be outside of the donor/settlor’s estate for IHT purposes after seven years.
  • Ensures that any future growth in the value of the investment held by the trustees will immediately be outside of the donor/settlor’s personal estate.
  • It allows the trustees (of which the donor/settlor can be one) to make payments to the beneficiaries of the trust at any time.
  • The trust will continue to the end of the trust period (125 years) or until the trust fund has been distributed to the beneficiaries in full.
  • The donor/settlor cannot benefit from the trust fund in any way.
  • The trust can pay ongoing adviser fees.

The value of the bond held within the trust can fall as well as rise and your clients' beneficiaries may get back less than your clients invested.