HMRC will increase the interest rate used to value the retained rights from discounted gift schemes to 6.75% from 4.5% with effect from 1 May 2023.
This change applies to valuations of retained rights both at the inception of a discounted gift scheme and at any ten-year anniversary which falls on or after 1 May 2023.
Discounted gift schemes are an inheritance tax planning arrangement where the investor places a bond or policy into trust, but retains the right to receive a specified level of withdrawals or policy maturities for the remainder of their life. There is a transfer of value when a person enters into a discounted gift scheme and this transfer is quantified as the difference between the amount invested, and the open market value of the retained rights.
