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 2015 – showed that the market comprised investment in seven key areas, as follows:

  • General Enterprise (46%) – mainly AIM portfolios
  • Renewable Energy (26%)
  • Infrastructure (19%)
  • Real Estate (17%)
  • Lending (>10%)
  • Media (>5%)
  • Leasing (>5%)

The numbers add up to more than 100% because some products offer a combination of strategies.

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

  • Capital preservation
  • Ongoing access
  • Steady growth
  • Low risk

The issues of “capital preservation”, “steady growth” and “low risk” have to be viewed in the overall context of what is being considered here, which is an investment in an unquoted, trading enterprise; to qualify for BPR that enterprise must be exposed to trading risks. The reference to “ongoing access” 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 are some of the enterprises actually doing?

The following summaries are taken from AiR 2015 referred to above:

  • Our renewable energy generation companies are able to offer steady and predictable returns underpinned by the Feed-in-Tariffs, which are guaranteed by the Government and index-linked for the next 20-years
  • Our infrastructure assets include 40 operational solar plants, 14 waste projects under construction or operational and several PFI (Private Finance Initiative) projects, including 13 schools an 4 hospitals.
  • Developed a unique financing arrangement to fund the roll out of smart meters across the UK.
  • Own and operate two self storage sites with income generated from fees paid for storage services.
  • During 2014 completed the sale of £20 million of UK forestry assets.

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 info@clivebarwell.co.uk. Alternatively, you can follow Clive on Twitter, connect with Clive on LinkedIn or see Clive's profile on Google+.