BR Guide FINAL 20 Feb

GUY TOLHURST MANAGING DIRECTOR, INTELLIGENT PARTNERSHIP Introduction This guide is designed as a concise and practical day to day reference document, for easy insight into the technical, planning and legislative aspects of using BR. Relevant case studies, an outline of the rules and updates on rule changes give clarity on when and how BR can be helpful. Detail on the types of services that are on offer and how to assess them informs advisers on the range of products available that might best fit their clients’ needs, how advisers can integrate BR into their operations and how to use BR to generate more business via professional connections with lawyers and accountants. I hope you find that this a useful resource over the coming months. PS, whilst the key focus of this guide is the nuts and bolts of using the relief, the focus of our annual BR Industry Report is on opinions, forecasts, research, market analysis, including current key metrics and provider and adviser discussions. This insightful resource is also available free of charge from Intelligent Partnership. Learning Objectives After reading this guide, advisers will: • Understand the rules and practicalities that govern the relief. • Be familiar with the main structures through which BR investment can be achieved in practice in various estate planning scenarios, including in conjunction with other estate planning options. • Have an awareness of how relationships with professionals in the legal, accountancy and financial services fields work in practice and how to benefit from them. • Understand how to integrate BR into their businesses. • Have examples of how and under what circumstances BR can be used. A guide like this is rarely the product of one organisation’s efforts: to ensure that it is up to date, comprehensive, accurate and captures all of the key issues requires an industry-wide initiative. We’ve had plenty of help producing this guide and would like to thank SOLLA, The Institute of Directors, Technical Connection and Higgins Fairbairn Advisory LLP. Their input is invaluable, but needless to say any errors and omissions are ours. Most of all we would like to thank our sponsor TIME Investments . It would not be possible to produce educational material like this without their generous support and contribution towards the production, printing and distribution of the guide. Acknowledgements NIGEL ASHFIELD MANAGING DIRECTOR, TIME INVESTMENTS Financial planning for later life can be complex. Clients have a variety of issues to consider, including when to stop working, how to fund their retirement, making provision for care, considering how best to make use of the capital in their home and how best to approach their estate planning for loved ones. There are a lot of variables, and a lot of unknowns. Indeed, sometimes solving one problem can create another issue elsewhere. For example, gifting away assets to reduce the eventual inheritance tax (IHT) bill could raise questions about funding long term care at a later date. These kinds of dilemmas are becoming more prevalent as life expectancy increases and levels of personal wealth expand. To cope with this increasing complexity and provide the best possible service to their clients, it’s important that advisers are aware of all of the possible solutions that are available. In relation to estate planning, advisers should give consideration to investments that qualify for BR, identifying when these are both suitable and appropriate. This requires that advisers have the in-depth knowledge to select the right options for their clients. Why should advisers be considering BR? Typically, BR solutions offer levels of return, access and flexibility that conventional estate planning solutions simply cannot. Used appropriately they can be viable options for clients who need speedy access to IHT relief. They should also be considered where clients want to convert existing ISA portfolios, and for those who still require growth and liquidity in addition to IHT relief. However, like all investments (and indeed all financial planning decisions), there are risks. This is why it is important that advisers are not only well informed in this area of advice, but also have a good understanding of the BR market, including the range of alternatives available and the risks and benefits of each. I personally recommend that you review the section on assessing and comparing Estate Planning Services on page 38 which details many of the questions that you may want to ask your BR service provider to ensure that you fully understand the risks of each service. It’s also worth noting that BR has a very positive impact on UK PLC; for the five years from 2010/11 to 2014/15, HM Revenue & Customs (HMRC) statistics show that over £5.6 billion of inheritance tax relief was granted against BR qualifying assets. That translates to £5.6 billion of investment into unlisted companies (directed at SMEs which are the backbone of the UK economy) or protection of family business assets, safeguarding their survival and potential future growth. (The family business sector in the UK now employs over 12 million people, generating a quarter of GDP and paying £133 billion in tax annually.) We hope that this guide helps readers strengthen their understanding of BR and ultimately means that consumers will be able to benefit from access to the wide range of estate planning solutions available. Opening Statement