The FPIL Loan Trust allows UK domiciled individuals to make a loan into a trust, rather than an outright gift.
Issues for consideration
- The Loan Trust is only available for use with new applications. It cannot be setup on an existing plan.
- The lender can request the loan to be repaid at any time.
- Only the outstanding loan amount can be repaid to the lender.
- There are no restrictions on the amount or frequency of repayments.
- Taking more than 5% of the cumulative tax deferred allowance as a withdrawal in a plan year could trigger a chargeable event if UK resident.
- Only the growth is outside of the settlor’s estate for IHT planning.
- Any loan repayments that have not been spent will remain inside of the estate.