Readers' forum : Discounted gift trust

My client lives in a house worth about £700 000. He also owns an investment company that holds investments under management of about £900 000. The investment manager has suggested to my client that he might like to consider a discounted gift trust but he does not have any cash.

Would it be possible for him to sell his house to the company for £700 000 and place the investment which would now be in his name into a discounted gift trust? He could then draw 5% from the discounted gift trust each year to provide him with an income. At present he must draw income from the company and either pay PAYE tax on this or the new dividend tax. The intention is to transfer the shares in the company to his children over time using his and his wife’s capital gains tax annual exemption.

If...