Platform for Investment in a Discretionary Trust

xylophone

https://www.hl.co.uk/help/tax-information/tax-facts/discretionary-trusts/what-are-the-tax-rates-for-discretionary-trusts

Dnomyard

xylophone said:

https://www.hl.co.uk/help/tax-information/tax-facts/discretionary-trusts/what-are-the-tax-rates-for-discretionary-trusts

Thanks for this - a good summary and I shall accept HL's very sound advice to "not make, or refrain from making, any decisions based on this information alone" and, in due course, go back to my solicitor.

I am long retired, and proposing to set aside for my five grandchildren aged 2 to 16, average age 6, possibly until they are 25. I am unlikely to incest more than £250k, which hopefully will grow. The bits that HL have left out of the summary, for simplicity are therefore quite relevant.

Firstly, that the tax is pooled, and if a beneficiary has a marginal tax rate of <45% the difference is refunded. I shall consider it a high quality problem if any of them have a marginal tax rate of  >20% before they are 25, though I am unlikely to be here to know in most cases.

Secondly that the first £6k of CGT does not count.

Thirdly that the 20% chargeable transfer rate compares favourably with IHT of 40%, and may not be payable at all since I believe the trust fhas a NRB of £325k which is some way above all my PETs and chargeable transfers.

Furthermore, the trust will be funded mainly out of my taxed income, so I am not too concerned about IHT. The trust will be taxed on its income and gains only in years where there are income and gains, whereas an IFA will want his pound of flesh even when the investments go down.  

xylophone

I am unlikely to incest 

Hope that's true!

https://www.whatinvestment.co.uk/discretionary-trusts-can-used-inheritance-tax-planning-2553731/

is a couple of years old but you might find it of interest.

Dnomyard

xylophone said:

https://www.whatinvestment.co.uk/discretionary-trusts-can-used-inheritance-tax-planning-2553731/

is a couple of years old but you might find it of interest.

Many thanks again. Sorry about my poor proofreading of my previous post.

I don't think the relevant law has changed in the last two years, so this is extremely helpful. It is a pity I did not do all this before, but I did not expect to outlive my (second) wife who was eleven years younger.

bigadaj

xylophone said:

I am unlikely to incest 

Hope that's true!

https://www.whatinvestment.co.uk/discretionary-trusts-can-used-inheritance-tax-planning-2553731/

is a couple of years old but you might find it of interest.

Not following norman tebbitts advice on inheritance then?

Doneby55

I'm a trustee of a discretionary trust and use HL. Had no problems - always found them very good. 

You will also need a legal entity identifier (LEI) - I used Bloomberg, but other providers are available. This identifier is then just added to the HL account. 

Dnomyard

Bigadaj, I thought Norm had his tongue in his cheek,

Thanks Doneby, I will get one. Do all trustees need one, just the settlor or just. the Trust?

xylophone

https://www.hl.co.uk/help/mifid

Doneby55

Dnomyard said:

Bigadaj, I thought Norm had his tongue in his cheek,

Thanks Doneby, I will get one. Do all trustees need one, just the settlor or just. the Trust?

Only the trust needs one. Cost was about £70 from memory. Online form to fill in and will need to upload a copy of the trust deed. Then when the number is issued, you can submit it to HL online.

jackcrabb

I am a trustee for a discretionary trust set up by my late father. I have duly registered it but am now struggling to invest it even in the simplest of savings accounts. It is a relatively small amount of money and I am only looking for a short term 'safe' investment at this stage. Situation is not helped by COVID situation either as most banks not fully operational. Any suggestions welcomed.
Thanks in advance