In August 2016 I set up a Discretionary Trust with two
trustees and 2 beneficiaries – my children who are currently in their 30’s. Invested
was a Chargeable Lifetime Transfer of £250k having an initial desire not to
exceed £325k (IHT Nil Rate Band) by August 2023(7 years of Trust). This was
perceived to be the most advantageous Tax position and ‘no income’ was planned
to be taken for beneficiaries or trustees
My perceptions were that;
extraction from Trust (say to trustees) resulted in punitive Income Tax i.e.
-if Trust exceeded £325k then
excess would be subject to a 20% lifetime tax charge, when money was withdrawn
-on Tenth anniversary would have
pay 6% on excess above Standard Nil Rate band (whatever it might be then which
as usual tends to be anyone’s guess)
–it might be possible to
‘extract’ some moneys into suitable Tax vehicles for non-beneficiaries e.g.
grandchildren (Junior ISA?). I didn’t get to ‘bottom’ of this and did not believe
would be an issue
Fortunately I have been successful in investments in Fund
and the £250k is now (July 2018) over £310k(over 20% in 2 years) and so rapidly
approaching the NRB and could reach in Tax Year 2018/2019 or year after(subject
to normal caveats on investments , stock markets etc.)
Therefore seeking further information on how do I avoid reaching Nil Rate Bands?
E.g. Can I
create Junior Isa (with grandchildren parents) and siphon money into them
without incurring the relevant tax .How do I declare what I have done in
relevant Tax Returns.
E.g. Any other