International Portfolio Bond Discounted Gift Trust

For your clients who want an income and to reduce their inheritance tax liability

Investing money into a trust can sometimes mean that the client loses access to the income that a lump sum can offer and in some instances this income may be valuable, for example if it is supplementing income later in life.

The International Portfolio Bond combined with a Discounted Gift Trust from Canada Life International Assurance (Ireland) allows your clients to invest a lump sum of money and to receive regular payments from the trust. These payments can be made monthly, quarterly, half-yearly or yearly depending on the client’s circumstances. As these payments utilise the tax deferred withdrawal facility from an investment bond, there is usually no immediate income tax liability.

The capital value of the income scheme, called the discount, is outside of the client’s estate immediately with the balance of the payment being a chargeable lifetime transfer or a potentially exempt transfer depending on what type of trust is used. This means that the whole investment can be outside the client’s estate after seven years and the growth is outside from outset.

  • The tax efficient growth of an investment based in Dublin means that for a UK resident any growth achieved in the Bond is not subject to UK tax although tax may apply when any profit is brought back into the UK.
  • After the settlor dies the value of the trust will be available. Depending on the type of trust used the trustees can pay these funds out to the chosen beneficiaries or maintain the trust and pay out benefits as and when they choose.
  • A choice of charging options offering flexibility for different clients.
  • The ability to use multiple investment solutions at any time, allowing investors to mix and match between funds, cash deposits, discretionary managers and investment platforms.

The Bond is true open architecture – this means that almost any collective fund from around the world can be used, as can cash deposits, investment platforms and discretionary managers. The list of platforms and discretionary managers is always evolving and being added to.

It is possible to use multiple funds, platforms and discretionary managers and the investments can be changed at any time.

The value of investments can fall as well as rise and you should speak to a professional adviser to ensure that any investment is suitable for you.

The International Portfolio Bond combined with a discounted gift trust will appeal to UK investors who want to combine a tax-efficient investment and reduce the inheritance tax liability on their estate whilst receiving regular payments to supplement their income.

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This website is for UK professional advisers only and is not approved for use by private customers.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.