Lifetime Gift Report
Lifetime Gift Report
Making a substantial gift, and making it the right way.
The easy part is deciding to help. How you make the gift is harder. An outright gift, a gift on bare trust and a gift into a discretionary trust are taxed differently, protect the asset differently, and give you different say over it. Once made, it is hard to undo.
The report sets the options side by side: tax cost, protections, trade-offs.
An outright gift is a potentially exempt transfer and leaves your estate entirely if you survive seven years. A gift into a discretionary trust is chargeable when you make it, and the seven years still count: it stays in the running total against your nil rate band until they pass. It also carries a continuing cost, a charge on each ten-year anniversary and an exit charge when capital leaves, both on value above the trust’s own nil rate band, usually £325,000.
This report is for you if
- You are about to give a substantial asset to a person, to several people, or into a trust.
- You are weighing an outright gift against a trust.
- You want the tax cost before you commit, not after.
A worked example
£500,000 in cash into a discretionary trust is chargeable now: 20% on the £175,000 above the nil rate band, assuming no chargeable gifts in the previous seven years, about £35,000. Given outright it carries nothing.
On assets standing at a gain, an outright gift triggers capital gains tax at once, while a discretionary trust can hold the gain over under section 260, deferring it rather than removing it.
| Up to £250,000 | £3,000 |
| £250,000 to £325,000 | £4,000 |
| £325,000 to £1m | £5,000 |
| Above £1m | 0.5% |
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