Reducing UK Inheritance Tax for UK Res Doms
Lending
Achieves:
Substantially reduces IHT on cash and investments
Requires:
Liquid assets in excess of £255,000
How it works:
You could set up a trust for your beneficiaries and then lend money to it which is invested in a bond. All the growth on this bond belongs to the trust which, in effect, freezes your IHT liability. If necessary, you can get your hands on the capital whenever you want by asking the trustees to repay the loan in whole or part. You can waive your right to the loan at any time and, providing you survive for a further seven years, it passes out of your estate free of tax.