INVESTMENTS
SHOULD YOU BE THINKING ABOUT ESTATE PLANNING ?
Planning for what happens after you ’ re no longer around might not seem like the most cheerful topic but , with the ever-growing concern around large inheritance tax ( IHT ) bills , thinking ahead has become essential .
The complexities of IHT can be confusing to understand and awkward to discuss . As a consequence , every year a growing number of families end up paying large IHT bills that could have been legitimately mitigated . However , what if there was a way to mitigate IHT and benefit from an attractive trade , uncorrelated to equity markets ? IHT bills have been steadily rising since 2009 , as a result of the government freezing the £ 325,000 threshold , known as the nil-rate band , above which the 40 % tax is charged on estates . Between April and December 2021 , HM Customs and Revenue collected £ 4.6 billion in inheritance tax , an increase of £ 600 million on the year before , and during the calendar year 2021 collected £ 5.9 billion .
Business Relief Business Relief ( BR ) has been part of inheritance tax legislation since 1976 . Originally put in place to allow family businesses to pass from one generation to the next , the scope has been widened over the years to allow a broader range of investors to benefit from the relief . BR typically enables qualifying assets to obtain IHT relief faster than trusts or gifts and , most importantly , can be done without a loss of control for the investor over their investment , a critical point for investors with Power of Attorneys in place to consider . Assets that qualify for BR include unquoted trading businesses and certain qualifying companies quoted on AIM . If you hold shares in qualifying businesses for a minimum of two years at the date of death , the shares may qualify for BR , and therefore not be liable for any IHT . However , with a broad range of trades and sectors available to investors it is critical that advisers think carefully about the right type of BR investment for their clients , including the sectors , their respective risk / return profiles , the experience of the investment manager and whether they meet the objectives for your client .
Leasing and Lending Business Relief Unquoted trading companies can be an attractive option to mitigate IHT for those targeting returns that are uncorrelated to equity markets . Triple Point ’ s approach is to target BR through specialist leasing and lending companies that arrange funding for both the public sector and private corporations , ranging from local authorities , the NHS , housing associations and large corporates – to tens of thousands of UK SMEs . Leasing and lending has previously been the preserve of banks and financial institutions , but Triple Point ’ s estate-planning solutions uniquely enable investors to access this strategy , benefiting from highly diversified trading that is uncorrelated to equity markets . Managing a diverse debt financing book with c .£ 750 million of AUM , Triple Point provided £ 285 million of financing to UK-based
48 | the adviser