Standard Life is calling for the life assurance industry to create a new more consistent approach to discounted gift plans in inheritance tax planning.
The Edinburgh-based life insurer says a clearer, more consistent approach is needed to the product to provide more certainty for customers and help advisers to concentrate on investment issues as well as quality of service and underwriting.
A discounted gift plan is designed for customers who want to gift money to a trust as part of their IHT planning strategy, while retaining a right to future set payments from that trust which are often called "income".
The role of the discount is only relevant if the customer dies within the first seven years of creating the plan. In that case, the amount added back into their estate for IHT purposes might be less than the original cheque they wrote, hence the name "discount", which can reduce IHT. The value of the discount depends on the age, health and sex of the customer as well as the level of withdrawals selected.
Standard Life says there are a wide variety of practices across the industry. Each life assurer negotiates separately with HM Revenue & Customs regarding the methodology behind their own discount tables.
Meanwhile, the Government Actuary's Department publishes standard rates for annuities but no such standard rates are agreed for discounted gift plans.
Julie Hutchison, senior solicitor at Standard Life says: "We think it makes sense that the discounts associated with discounted gift plans across the industry should be consistent so the real focus remains on investment choices and the quality of service and underwriting. We will be pursuing the theme of consistency through the Association of British Insurers and hope that HM Revenue and Customs will be receptive to this proposal. We would welcome an industry initiative to bring much needed clarity to this area."
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Joined as head of strategy, multi asset, in June
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