Ashlynwood hosted an Inheritance Tax (IHT) Seminar in collaboration with Octopus Investments and City Financial Consultants. The seminar highlighted three options in IHT planning including Business Property Relief (BPR), Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS).
Business Property Relief (BPR)
Business Property Relief (BPR) essentially reduces the value of a business or its assets when working out how much Inheritance Tax has to be paid. Any ownership of a business, or share of a business, is included in the estate for Inheritance Tax purposes. One can get Business Relief of either 50% or 100% on some of an estate’s business assets, which can be passed on either (a) while the owner is still alive or (b) as part of the will.
Venture Capital Trusts (VCT)
Venture Capital Trusts (VCT) essentially invest in smaller VCT-qualifying companies that have the potential to grow much faster than their larger listed counterparts, although they are high-risk investments. Investing in new VCT shares entitles one to claim a number of tax incentives on investments up to £200,000, these include:
(a) Up to 30% income tax relief on the amount invested (if you invested £10,000 you could claim £3,000 off your income tax bill, although the amount of income tax relief claimed cannot exceed the tax due)
(b) Tax-free capital gains and
(c) Tax-free dividends.
The tax-free dividends paid by a VCT can provide a supplementary income, which could be useful for investors who are approaching or in retirement. VCTs could help diversify your overall portfolio by giving you access to companies you might not normally have had access to.
Enterprise Investment Scheme (EIS)
Enterprise Investment Scheme (EIS) is a government plan which encourages equity investment in new businesses. EIS involves direct equity into a start-up, making it a high-risk option. However, it offers a 30% income tax relief and can be used in conjunction with BPR – where if held for two years, can receive free IHT and Capital Gains Tax deferral.
About our partners for the seminar
Ashlynwood hosted this seminar and provides a range of bespoke professional services, including Governance, Regulation and Compliance Assurance as well as Operational Support, Accounting and Tax, to the Banking & Financial Services sector, Not-For-Profit organisations and Multi-Family Offices.
Octopus Investments has over 600 employees, and more than £8 billion of assets under management of some 150,000 clients. Octopus Investments have built positions in tax-efficient investment, smaller company financing, renewable energy and healthcare.
City Financial Consultants offers private and corporate clients a range of financial advisory services, some of which are available exclusively through their membership of the St. James’s Place Partnership.
Rowan Darlington provides personalised investment management solutions to help clients achieve their goals.