Non-domiciled IHT Briefcase

Client has £1,000,000 in offshore assets; invests the value into Portfolio Account
Puts the bond into an Excluded Property Trust while non-UK domiciled
As the assets are offshore, no tax charge when making the gift into trust
Client is later deemed domiciled for IHT purposes, having spent 17 of the last 20 tax years in the UK
Worldwide assets now subject to UK IHT - but assets in the trust remain excluded
Client can access trust assets at any time; withdrawals within the 5% allowance are tax-deferred
Client dies after 10 years; no IHT arises on the trust assets
Trustees can make payments to beneficiaries, but assets within the trust remain free of IHT, even if the beneficiaries are UK domiciled

Excluded property has to be situated outside the UK, so onshore bonds cannot be held in an Excluded Property Trust
Bond is a non-income producing asset, so no UK income tax liability except on a chargeable event
Investments in the bond grow free of tax other than withholding tax
5% tax-deferred allowance enables withdrawals without immediate tax
Switches between investments within the bond don't give rise to CGT
Assignment facility may offer further tax-efficiency when benefits are distributed

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