HMRC has increased the valuation rate of interest used to determine the value of retained rights under discounted gift schemes from 4.5% to 6.75% per annum with effect from 1 May 2023. Revenue and Customs Brief 4/23 highlights the importance of the change for providers of discounted gift schemes and those who give advice on the valuation of retained rights. The change will apply for valuations of retained rights both at the inception of a discounted gift scheme and also at any ten-year anniversary charge on or after 1 May 2023.
Discounted gift schemes involve the settlor making a gift into settlement but retaining certain rights (such as the right to withdraw certain amounts every year for the rest of their life). Any rights retained in this way will reduce the value of the settled fund that has been given away, meaning that its value will be ‘discounted’ as a result of those retained rights. The interest rate is used in the formula for calculating the value of the retained rights. HMRC’s Inheritance Tax Manual provides guidance on discounted gift schemes at IHTM20421 onwards.
HMRC has increased the valuation rate of interest used to determine the value of retained rights under discounted gift schemes from 4.5% to 6.75% per annum with effect from 1 May 2023. Revenue and Customs Brief 4/23 highlights the importance of the change for providers of discounted gift schemes and those who give advice on the valuation of retained rights. The change will apply for valuations of retained rights both at the inception of a discounted gift scheme and also at any ten-year anniversary charge on or after 1 May 2023.
Discounted gift schemes involve the settlor making a gift into settlement but retaining certain rights (such as the right to withdraw certain amounts every year for the rest of their life). Any rights retained in this way will reduce the value of the settled fund that has been given away, meaning that its value will be ‘discounted’ as a result of those retained rights. The interest rate is used in the formula for calculating the value of the retained rights. HMRC’s Inheritance Tax Manual provides guidance on discounted gift schemes at IHTM20421 onwards.
