The Quandary – Protecting your assets for your family.
You pay tax throughout your life on your income, investments and savings, so it can be exasperating to think that on your death, your beneficiaries may suffer a further tax demand on the estate you have worked so hard to build and pass on.
Inheritance tax (IHT) is an issue for many of us, and the number is increasing all the time. Even with additional legislation introduced in April this year, IHT receipts are forecast to increase from £4.5billion in 2015/16 to £6.5billion by 2020/21. Will yours be one of the 65,000 estates with an IHT liability on death by 2020/21?
While there are a number of ways that you can address this issue, it often involves a compromise that does not meet your needs; such as gifting and losing control of assets that you may well need in the future.
A potential solution for you is to qualify for Business Property Relief.
What is Business Property Relief?
The legislation was introduced over 40 years ago and its main purpose was to encourage the investment into certain types of trading businesses. On the death of the investor, if the asset has been held for at least two years it can be passed on to beneficiaries free from inheritance tax. This has been particularly valuable to family businesses but is also available to everyone who wants to protect assets for their family.
You may be thinking, “But I’m not a business owner, so how can I benefit from this?”
Investing in the following assets will obtain qualification to Business Property Relief:
- Qualifying company shares listed on Alternative Investment Market (AIM)
- Qualifying company shares not listed on any stock exchange
- SEIS (SEED Enterprise Investment Scheme)
- EIS (Enterprise Investment Scheme)
- Discretionary Managed Inheritance tax portfolios
- ISAs (Since 2013 you can hold AIM listed shares within ISAs)
Who could benefit from Business Property Relief?
Anyone who is worried about inheritance tax should consider looking at how this piece of legislation could help them protect their hard earned estate from unnecessary tax liability.
- You may already qualify for Business Property Relief as a business owner but don’t fully understand how this impacts on you.
- You may have sold a business in the last three years that once qualified for Business Property Relief but didn’t realise it could be reinstated.
- You may be thinking of the sale of a business but are concerned that you will lose Business Property Relief qualification.
- You may believe that your business qualifies for Business Property Relief, but it may not! Disqualifying your business is easy!
- You may be acting as Power of Attorney for a family member who has a potential IHT liability and don’t know how to address the issue.
- Your business is awash with cash that could jeopardise qualification for Business Property Relief.
- You may simply want to know how to make your existing assets more IHT efficient.
If you currently find yourself in any of the above situations or simply want to understand more about how you can protect more of your hard earned wealth for your family/beneficiaries then now is the time to start a conversation with a Lifestyle Financial Planner.