Who are they for?
Anyone who wants to mitigate Inheritance tax.
Mr and Mrs Smith are both in their mid 70’s. They have cash of £200,000 which they will not need access to during their life time. However, they do want and need an income.
The income has to be specified at the beginning. It can be fixed, or linked to RPI.
Dependant on age and state of health part of the invested sum of £200,000 is immediately outside of their estate for IHT. If say, 100,000 was discounted that would give an immediate saving of £40,000 in Inheritance tax. The remaining £100,000 would come out of the estate over 7 years.
Are there any other tax advantages?
Due to the way they are structured Mr and Mrs Smith can have up to £10,000 income each year without immediate tax liability. This can continue for 20 years. In year 21 any future income is taxed as earned income. If structured in a particular way growth can roll up in a virtually tax free environment.
Values of investments fall as well as rise. Past Returns are no guarantee of future returns. Hart Greaves are careful to review all funds held in our portfolios on a regular bases.
This short note is not advice and no action should be taken based on the above content. Please contact us for a full report on your options.