Estate & IHT planning is an ongoing process and should be started as soon as an individual has acquired assets. As circumstances change and goals shift, the estate plan should be reviewed in line with new goals. Lack of adequate estate planning can cause undue financial burdens to loved ones.
Inheritance Tax
It’s crucial to preserve your legacy and pass on the maximum value to your nearest and dearest. Inheritance Tax (IHT) planning can help ensure that more of your hard-earned wealth goes to your loved ones rather than the taxman. There are several ways of achieving this, the most common of which are lifetime gifts, tax-efficient trusts and Whole of Life Assurance policies.
Gifts, Trusts or a Business Relief Investment?
Gifts and trusts are commonly used to reduce IHT. However, Business Relief (BR) is a powerful tool in Inheritance Tax planning, helping to reduce or eliminate your IHT bill altogether. BR investment products are ideal if you want to retain access to your money while planning for the future. Depending on suitability, any investor can hold BR-qualifying shares, the value of which after just 2 years could be 100% free of IHT to be passed to beneficiaries or encashed. A BR investment can therefore be a simpler and quicker way to mitigate IHT and also provide greater liquidity
Business Relief (BR) or Business Property Relief (BPR) investment products as they were previously known, can play a major role in IHT planning and are an effective way of reducing or eliminating your IHT bill. These products are a well-established tax break available to all individuals with no requirement for the investor to own a business.
Many individuals wish to retain access and control of their assets, so are not keen to give away large sums of money during their lifetime to reduce their IHT liability. In such instances, an investment in a BR product can provide the ideal solution.
The two-year qualification period of BR -qualifying investments can help the very elderly (who perhaps previously felt they would not be caught in the IHT net) or people in poor health who have not made any provision for estate planning and may otherwise feel they have left it too late.
BR products invest in non-listed businesses with established, secure income streams. An investment in a BR-qualifying business can be an effective way of giving your inheritance the opportunity to grow for those who will benefit from it. Many BR investments provide access to sustainable sectors, such as renewable energy generation or forestry, which means clients can choose to leave a financial legacy for future generations whilst their investment creates a positive impact during their lifetime.
Relief from IHT is available at either 100% or 50%. This depends on the type of business assets you own.
You can get 100% Business Relief on:
- A business or interest in a business
- Shares in an unlisted company
You can get 50% Business Relief on:
- Shares controlling more than 50% of the voting rights in a listed company
- Land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled
- Land, buildings or machinery used in the business and held in a trust that it has the right to benefit from
BR qualifying investments are also a good fit for business owners who are either seeking to preserve their BR qualification to fall outside of the charge to IHT when they sell the business, or who have excessive cash balances within the business that may limit the availability of BR IHT.
Please note that tax treatment depends on the individual circumstances of each client and tax rules may be subject to change in future. There cannot be any guarantee that companies that qualify today will remain BR qualifying in the future.
Understanding The Risks
BR products are high risk investments which invest in smaller, unlisted, or AIM-listed companies. Investments in unquoted companies or those quoted on AIM can fall or rise more sharply than shares in larger companies listed on the main market of the London Stock Exchange, and may be harder to sell, so you may lose your capital.
Consequently, BR providers usually insist on investors taking advice from a regulated professional adviser to ensure suitability of their investment. There are a small number of distributors who offer BR products on a non-advised basis, but these will only be able to offer a small number of products. At Best Advice Wealth Management, we can add value by giving you access to a much wider choice, as we offer BR investments on an advised basis only and through ALL of the main UK recognised providers.
Lowest Advice Fees
We are confident that our fees for providing advice on these types of investments are the lowest that you will find anywhere in the UK.
For BR investments, our advice fees are 1% of the amount invested, subject to a minimum of £300, in addition to provider fees which vary across fund managers and are typically 2%-3% upfront. Fees vary across providers but we are confident that the costs to investors, including our advice fees will be cheaper than any other distributors, including the few who offer a very limited number of BR products on a non-advised basis.
Get In Touch Today
At Best Advice Wealth Management, we are able to guide you through your own financial situation and provide estate & IHT planning solutions where necessary to meet your needs and wishes. We invite you to get in touch for a no-obligation discussion to see how we can help.