BR Guide Second Edition

GUY TOLHURST MANAGING DIRECTOR, INTELLIGENT PARTNERSHIP Introduction Welcome to the second edition of the Adviser’s Guide to Business Relief. We’ve had great feedback on our first edition and we’ve taken on board your suggestions to make this edition even more useful. You can continue to refer to it for the relevant rules and technicalities, plus it has been updated with the latest developments that impact the practicalities of BR investment. New thought leadership perspectives on the utility of BR are included and we’ve added new case studies that illustrate additional planning ideas. Guidance on the transfer of BR-qualifying assets, what to look for in BR managers’ liquidity management strategy and tips on working with vulnerable clients are aimed at making this a helpful day-to-day resource. P.S., for insights and opinions on BR, with market analysis and provider and adviser discussions, we have a ’BR Industry Report’ which is 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 to identify and work with vulnerable clients and an understanding of why this is beneficial to advisers. • Understand how liquidity options can be provided within BR offerings. • 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 Jane Finnerty, Fiona Graham, Tish Hanifan, Lisa Mead, Dave Robinson, Andrew Swallow, and Mark Walley. 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 Since the first edition of this guide, many clients continue to face the same estate planning questions. Society is still ageing, demands on our finances come from multiple directions (including both older and younger family members) and care costs continue to loom large in the minds of older people. On the flip side, asset values are still rising and so is HMRC’s projected Inheritance Tax (IHT) take - set to be £6.3 billion by the 2023/24 tax year. To keep up with the changing landscape of estate planning, advisers require a knowledge and understanding of the full range of options available, including those outside of the more common gifting and trust methods. Investments that qualify for Business Relief (BR) have become increasingly popular and mainstream as they offer greater flexibility, speed and access. As BR investments have become more mainstream, the number of providers offering IHT mitigation services has increased. Greater choice means advisers now have a more difficult task to identify the service most suitable for their clients. Assessing the suitability of BR investments is crucial, especially when considering growth and liquidity requirements for clients. I personally recommend that you review the section on assessing and comparing Estate Planning Services on page 42, 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. Political and economic uncertainty has encouraged some older and more risk-averse clients to delay investments. Whilst this can be a sensible approach when considering investing for growth in equities, BR tends to be asset-backed so much of the risk may be mitigated. If a client’s objective is to maximise their legacy, a delay may not be in their best interest. The main benefit of a BR investment is that IHT relief is achieved after only two years, so delaying an investment only extends the qualification period for the client. A key criteria for BR qualification is that a business must be within the scope of UK IHT. Therefore, BR offers an opportunity to invest in UK businesses that support the UK economy and limit exposure to uncertain markets overseas. We view BR as an essential component of any adviser's toolkit. With a full understanding of BR and the various planning opportunities it can offer clients, advisers can add another strand to their estate planning advice. This guide is intended to provide readers with what they need to understand and use BR at the right time for the right client. Opening Statement