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The Loan Trust

Loan Trusts are suitable for individuals who need to do some inheritance tax planning, but are not prepared to give their capital away. They allow you to take back the capital all in one go or as a regular income over time. When you pass away any capital of the original loan that you have not taken back will be repaid to your estate (and so subject to inheritance tax) leaving the capital growth free of inheritance tax. The creation of a Loan Trust is not a gift for IHT purposes, so is not a chargeable lifetime transfer.

However, the 10-year periodic charge could apply if the investment growth is in excess of the then Nil Rate Band [NRB].

 

Any growth on the investments over and above the initial capital loan belongs to the beneficiaries and is therefore immediately outside of the settlor's estate for inheritance tax purposes. You can ask the trustees to repay the outstanding part of your loan at any time, thus giving you access to your capital whilst you cap the rate that your inheritance tax liability increases.


 
 
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Colyton Offices
The Mews, Queens Street, Colyton, Devon, EX24 6JU
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32 Rolle Street, Exmouth,
Devon EX8 2SH
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Briar House, Clyst Honiton, Exeter, Devon, EX5 2LZ
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Raymond James Investment Services Limited is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority (Updated 13/09/2018). Registered in England and Wales No. 3779657. Registered office: Broadwalk House 5 Appold Street London EC2A2AG. | RAYMOND JAMES is a registered trademark of Raymond James Financial, Inc. | Legal Disclosures