INVESTMENTS
BUSINESS RELIEF , THE RESIDENTIAL NIL-RATE BAND AND DISCRETIONARY TRUSTS / PETS
Dominique Butters Executive Business Development Manager Blackfinch Investments
Business Relief ( BR ) investments are just that ,
investments . How they gain Inheritance Tax ( IHT ) relief is on death , as long as the client has held the shares for a minimum of two years out of the last five years at the time of death . On death , they attract 100 % relief from IHT . This means that they are never ‘ outside of the estate ’ and always deemed to be an asset of the estate . This is important to note for the calculation of the Residential Nil Rate Band ( RNRB ) as BR assets will form part of it . With this in mind , when reviewing clients ’ estate values , if a client holds BR assets that have gone through the minimum twoyear holding period , now deemed to be Relevant Business Property , and they no longer need access to all of the BR investment , some or all could be given away . This can be done either through a trust * or a gift . However , this starts the seven-year clock for trusts / gifts . But , if the trust or the donee keeps the investments in the BR assets , should the donor ( client ) die in the subsequent seven years , then no IHT is payable . This will be the case even though the investment would be deemed a failed Chargeable Lifetime Transfer ( CLT ) or failed Potentially Exempt Transfer ( PET ), because it is still invested in an IHT-exempt asset . And as money has now been gifted / put into trust , this is then ‘ out of the estate ’ for the calculation of the RNRB .
WARNING : it ’ s crucial to be aware that if the donee or trust sells the BR-qualifying asset , and the client / donor dies within the seven years of making the gift , then the IHT would be payable .
Blackfinch Investments specialises in tax-efficient investing and we champion the use of BR-based solutions through our IHT range . Whatever a client ’ s situation or requirements , we can offer advisers support and expertise . For more information or to arrange a meeting please get in touch on 01452 717070 or at enquiries @ blackfinch . com . You can also see www . blackfinch . com .
* When using a Discretionary Trust as long as the BR assets have been held for a minimum of two years before the transfer is made , then although it is deemed as a Chargeable Lifetime Transfer , no 20 % entry charge is applied as it is in an IHT-exempt asset .
Capital at risk . Blackfinch Investments Limited is authorised and regulated by the Financial Conduct Authority Registered address : 1350-1360 Montpellier Court , Gloucester Business Park , Gloucester , GL3 4AH . Registered in England and Wales Company Number 02705948 .
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