There has been plenty mentioned about the lack of take up for Child Trust Funds, the vouchers sent out by the Government for all children born after September 2003, but the Financial Times has another angle to consider.
They reckon that CTFs could be a good vehicle for minimising grandparents’ Inheritance Tax (IHT) liability, as it’s not just the childs’ parents who can top up the savings.
Payments into a CTF account can be shown to come under the “normal expenditure out of income†exemption from inheritance tax (IHT). With a bit of planning, grandparents could shift more than £20,000 out of their estate if they live for the full 18-year term of the CTF account.