9
INTRODUCTION
With the Inheritance Tax (IHT)
threshold frozen and house prices
rising, it is estimated that 5,000
more estates a year will be liable for
IHT by 2018, an increase to 10% of
households from just 2% in 2012.
So mitigating IHT is no longer just a
problem for the very wealthy, but
now affects the mass affluent as
well - specifically the baby-boomer
generation who make up the backbone
of many advisers’ client banks.
However, traditional strategies for
mitigating IHT, such as gifts and trusts,
are not always flexible enough to
cope with the challenges created by
increasing life expectancy. It is very
difficult for advisers to predict if the
assets they plan on placing outside of
their client’s estate will be needed at
some point in the future - perhaps to
fund a longer than expected retirement
or provide for residential care.
Many clients are also put off by the
seven year time frame before traditional
solutions provide 100% mitigation, the
perceived legal complexities and the
necessity of ceding control of the assets.
These are some of the key drivers
behind a quiet but meaningful increase
in the market for a new range of
investment products and services
that provide Business Property Relief.
Known as Inheritance Tax Services,
Inheritance Tax Solutions or Estate
Planning Services, these products
utilise Business Property Relief to
help advisers mitigate the impact of
inheritance tax on their clients’ estates.
BPR products are riskier than the
traditional solutions, but they are easier
to implement, provide better access and
more flexibility, offer relief in a much
shorter timeframe and offer a wide choice
of investment strategies that hold out the
prospect of meaningful growth as well.
Up until now these products have
not been widely promoted and the
mechanics behind them are not always
well understood. It is difficult for
advisers to be certain that they are
looking at the whole-of-the-market
when they research them and, as with
many alternative investments, although
there is a strong investment case,
concerns around compliance and due
diligence are holding advisers back.
We aim to address that by bringing
all of the knowledge advisers need
together in one document. Used
in conjunction with listings and
investment review sites, advisers can
recommend BPR products to their
clients, safe in the knowledge that
they have done sufficient research.
The report will examine the
investment case; look at risk,
suitability and compliance issues;
trace the development of the sector;
look at a number of tax planning
scenarios; review the nuts and bolts
of the structures used to access the
relief and analyse the opportunities
currently available in the market.
We have also surveyed advisers,
investors and providers to get a
timely temperature check on what is
working well in the BPR marketplace,
what needs to be improved and
what the outlook is for the future.
Whether you already have a lot of
mileage in BPR investments, are
coming to them for the first time,
or are just curious to find out more,
readers of this report will be able to
navigate this vital and growing market
with increased levels of confidence.
The intention
of this report
is to provide
the very first
comprehensive
overview of
the market for
investment
products that
utilise Business
Property Relief.
