Discounted Gift Trusts

Our advice is to avoid using Discounted Gift Trusts (DGTs). They seem attractive. You get your Inheritance Tax exemption immediately. You don't have to wait 7 years or even 2 years. And you get a monthly income.

If you put £100,000 into a DGT you don't save 40% IHT on the £100,000. You receive a discount based on many factors mainly around your age and health. The discount could be 30% but is often less and sometimes nil. Even with a discount of 30%, you only save 40% tax on the 30% discount i.e. £12,000 IHTY on an investment of £100,000 not £40,000 as many people seem to think. And the "income" is actually repayment of capital. This is normally at 5% so if you put in £100,000 you would have to receive £5,000 per annum back. That usually just builds up year on year and will itself be subject to 40% IHT when you die. So you might put in £100,000, get a 30% discount and therefore save £12,000 IHT. However after 4 years you have £20,000 back which itself will result in £8,000 IHT. So the net saving is only £14,000. And if you live longer it can go negative.

Instead, why don't you speak to us. We have many better solutions.

Act now to save later.
Arrange a free consultation today.

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Call our dedicated appointments line today or complete the form provided to arrange your first meeting with McClure. It will cost you nothing and could save you and your loved ones money, time and hassle.

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