Ever since the Budget took place on 22 March, here at Standard Life we have been busy working to interpret the new IHT rules and bring you trusts which meet the needs of your clients.

We re-launched our Loan Plan and Gift Plan a few months ago and then August saw the return of our Discounted Gift Plan (DGP). The level of certainty around DGP has increased greatly, allowing us to be clear with you, which hopefully in turn will enable you to be clear with your clients. If you haven't done so already, then as outlined below, the time is now right to consider using DGP again.

Why should I consider using DGP again?

• The Finance Bill is now an Act, leading to a more settled legislative background.
• HMRC has seen our trust wording and confirmed how the Finance Act 2006 applies to Standard Life’s DGP.
• There have been positive discussions between HMRC and the Association of British Insurers to confirm how the new rules work. We attended a key meeting on 25 July and an ABI Guidance Note agreed with HMRC will be available soon which covers DGP.
• An HMRC announcement is expected soon on the new reporting limit for gifts to a DGP, meaning many clients will no longer face 12 pages of HMRC compliance forms when they set-up a DGP.
• We have just re-confirmed our discount methodology with HMRC to ensure it reflects the current valuation approach adopted by HMRC.

So, now you know why you should be considering using DGP again but what about the features that are available through it?

Features of DGP
The Discounted Gift Plan from Standard Life benefits from the following features:

• It's available with the Capital Investment Bond, Distribution Bond and International Bond.
• Clients will have access to 118 funds through the Capital Investment Bond and 48 funds through the International Bond.
• Withdrawal options ranging from 0.5% to 10% are available giving flexibility to clients.
• Single and joint settlor options are available for flexible family financial planning.
• Flexible trust so that beneficiaries can be changed in the future.

Julie Hutchison, Estate Planning Specialist, comments:

“DGP is now even more interesting than it was before the Budget. A client could be writing a cheque for more than the nil rate band but, after underwriting, the gift is valued at less than the nil rate band after the discount so there is no 20% IHT charge. The DGP is likely to be very attractive to clients in their 70s with funds to invest, who have a need for withdrawals but are prepared to give-up access to capital.”

If you would like more information on DGP, please contact your Standard Life office or visit the IHT Planning area. There you will find a number of our Technical Briefing Cards covering the Budget changes and the impact on all of our IHT plans.

You can also check out the answers to common DGP queries we receive:
Discounted Gift Plan - FAQs

No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of this content.

Tax and legislation are liable to change. The information given here is based on Standard Life’s understanding of law and HM Revenue & Customs practice at the date of publication. Tax reliefs may be altered and their value to the investor depends on their financial circumstances.

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