Our has client has just settled an amount into a discretionary Discounted Gift Trust where the discounted value plus previous 7 years CLTs exceeds her available NRB.
She is expecting a 20% lifetime IHT charge on the excess but the text books are telling us that the 20% immediate charge must be grossed up by 25% as it is assumed that any immediate tax due is paid by the donor and is therefore treated as a further gift.
How can she avoid this grossing up?.What if she borrows the immediate tax due from the trustees or the beneficiaries or they pay it on her behalf?