Tax efficient disc trust

[Blueskies]

Hi there,

My dad wants to pass some assets to me and I was wondering about whether I could use a disc trust (DT) to make it tax efficient.

He passes the assets (couple of properties - £300k value) into the DT.
I would be the trustee.
Beneficiaries would be me and my two kids (aged 2 and 4).

I would distribute the income every year to my kids and they would claim the 50% trust tax back. So pretty much no tax.

When I want some assets/income, I could distribute some to me. I pay tax so I couldn't claim it all back.
Does that work?

Thanks,
Andrew

[Lee Young]

The scenario you outline would work, provided your father has no cumulative chargeable transfers on his iht "Clock". It would also help to defer the CGT (if any) on the disposal of the properties into the trust, though it would deprive anyone from claiming main residence relief on them going forward.

Your father is the one who really needs to take advice to ensure that this is a sensible ides from his perspective.