If you don't need access to your capital but will need an income a Discounted Gift Trust may be attractive. The trust will pay you a fixed ‘income’ for life (which like the loan trust is tax free until you have been paid back the full initial capital). Because the income is fixed, HMRC (the Revenue) ‘discount’ the value of the gifted capital for the purposes of calculating any Inheritance Tax. Unlike other schemes this has an immediate effect in reducing the value of your taxable estate, even if you were to die shortly afterwards. This type of trust is generally only suitable if you are confident you will not require the capital for anything else in the future.