Inheritance Tax, Business Property Relief and specialist BPR products

In Inheritance Tax – Mitigation using Business Property Relief – I introduced both Business Property Relief (BPR) and the concept of this being available to non-entrepreneurs. In this article, I will begin to explore the use of BPR products, which have been put together by specialist Investment Managers to bring BPR relief from IHT to a wider market.

What are specialist BPR products?

To comply with the rules for BPR any investment needs to be into an unquoted, trading entity and, elsewhere, I’ve looked at the use of AIM shares in this regard. However, for some people, the volatility – up and down share price movements – is something they can’t cope with and are looking for something that provides less of a “roller-coaster” ride.

A recent survey, conducted by Intelligent Partnership to compile their industry publication, “AiR” – the Alternative Investment Report 2018/9 – showed that the market comprised investment in seven key areas, as follows:

  • Technology (31.5%)
  • General Enterprise (31.5%)
  • Media & Entertainment (24.1%%)
  • Industry & Infrastructure (3.7%)
  • Pharma & Biotech3.7%)
  • Sport & Leisure (3.7%)
  • Food & Drink 0.8%)

With some of the general enterprise sector also being technology lead, the actual technology total was nearer 50%.

Beyond IHT mitigation, the key objectives of these products is to provide:

  • Expert management
  • Diversification
  • Accessibility

The rules on qualifying investments have been tightened in recent years, so be under no illusions, this is very much a “capital at risk” investment. The managers will use their expertise to identify suitable investee companies and they will diversify their investments, but these are generally start-up/early stage companies with a limited track record. The reference to “accessibility” is at each end of the process – investing and dis-investing. It is essential that Investors can invest when they want to, not just when the Investment Manager opens a new scheme. Equally, it is important that someone wanting to realise their investment, following death, or for another reason, can do so in a timely manner.

What’s next?

If you think you have an IHT issue and you want to consider ways of mitigating the impact this will have on your family’s future inheritance, contact me today using the form below.

    - Inheritance Tax

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    About Clive Barwell

    Clive Barwell is one of the most experienced and qualified financial planners working in the later life market today, he specialises in advice and guidance for the over 55s. To ask Clive a question, please email him at Alternatively, you can follow Clive on Twitter, connect with Clive on LinkedIn or see Clive's profile on Google+.