A FIC will not always be preferable to a trust but can be in certain circumstances. Here we look at the advantages/disadvantages of the two routes:

Lifetime gifts into a trust in excess of £325,000 are generally subject to an immediate 20% IHT charge as a chargeable lifetime transfer. This tax charge does not apply to gifts of shares in a FIC as those gifts will, if made to an individual, be potentially exempt transfers (PETs). However, gifting shares can incur CGT.

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