FAQ: other purposes for CWIP beyond IHT

Can CWIP have a purpose other than the payment of IHT on my death?

Yes, being a savings plan belonging to a beneficiary, the investment does not belong to you; but belongs to the beneficiary. The beneficiary can use the investment for any personal circumstance, including:

• building up their personal wealth;

• if equity risk is acceptable, starting an exposure to securities quoted on the stock market; and

• supplementing provision for their retirement (but in that case the beneficiary should also look at making some form of pension contribution. Further tax relief for the beneficiary could well be available).

What do you consider the most appropriate use for CWIP?

We believe this scheme is particularly appropriate:

• for grandparents who want to make provision for young grandchildren, so that capital can be built up for them. Uses for that capital could include paying university fees or towards a deposit for the purchase of a house or flat;

• where there is a concern that income is making your potential inheritance tax exposure on death worse. Regular payments can be stopped and started without penalty; and

• where you want to build up in the ownership of the beneficiary a capital amount that can be used towards payment of IHT on your death.