The Downing Estate Planning Service (DEPS) provides full IHT relief after two years by investing in and making loans to IHT-qualifying businesses in two sectors: asset-backed and energy. The target return on your investment (after charges) is 3%-4.5% p.a. over the medium term.
Your capital is at risk and you may not get back the full amount you invested. Investments are long term and high risk. Tax reliefs are subject to change and depend on personal circumstances. Please find further details of the risks here.
What do I need to know before investing?
Where is my money invested?
The money you choose to put into the energy sector will be invested in Bagnall Energy Limited. Your asset-backed investment will go into Pulford Trading Limited. These are specialist companies set up to invest in, and make loans to, businesses that qualify for IHT relief.
We look for businesses that have a talented management team and a trading strategy focused on capital preservation or steady growth. DEPS targets 3%-4.5% p.a. over the medium term (although this can't be guaranteed).
For energy businesses, we invest in companies that have planning consent or are based on proven technology. For asset-backed businesses, we invest in companies that own tangible assets because if anything goes wrong we should be able to sell these assets to try and recover money for our investors.
We conduct thorough research to really get to know a company and develop a strong business relationship. Currently we can give you immediate access to a £523 million portfolio of over 75 asset-backed and energy businesses (as at 30 September 2020) that offers you a degree of diversification if you invest in Bagnall and Pulford.
What are the risks?
Investments in estate planning services are not suitable for everyone, so we recommend seeking financial advice before investing. As with all investments, there are a number of risks you should be aware of before you invest.
- The value of your DEPS portfolio can go up and down so your capital is at risk.
- IHT tax reliefs are not guaranteed, subject to change, and only apply if you hold your shares for a minimum of two years and at death.
- IHT qualifying companies may lose their status if IHT rules change, which means IHT relief may no longer apply to the money you have invested in that company.
- The past performance of the DEPS portfolio is not a reliable indicator of future results.
- Investing in smaller companies generally carries higher risk because their shares are less liquid and harder to sell than those in blue chip companies on a main stock exchange.
- There is no guarantee that the Downside Protection Cover will continue after two years and if the conditions are not met in full then the cover will not pay out.
- The Life Cover policy is subject to conditions. If the conditions are not met in full then the policy will not pay out. Please ensure that you read the terms and conditions.
Please note this is only a brief overview of the risks involved with investing in DEPS. Please read full details of all the risks here before investing.
How is my investment protected?
- Downside Protection Cover: Included as standard and if you're less than 90 years old, this policy is designed to reduce the impact of any loss during a minimum of the first two years before your investment qualifies for IHT relief. It covers a loss in the value of up to 20% of your initial net investment - with no medical questionnaires or exclusions for pre-existing conditions and at no extra cost. The policy is renewable (by the insurer) each year although we can't guarantee it will remain in place after the first two years.
The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £500,000).
- Life Cover: This is optional for an additional fee and is available to investors under the age of 85 at the date shares are acquired. It covers 40% of your original gross investment upon death in the first two years and runs alongside the Downside Protection Cover. Please note, the Life Cover policy is subject to conditions and if they are not met the policy will not pay out.
The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £250,000).
What are the charges?
Most of the charges and costs are payable by the IHT companies and underlying businesses - not out of your portfolio directly. They will, however, reduce the returns generated by the IHT companies and, therefore, the value of the shares held in your portfolio. Please see the brochure and terms & conditions for more information on all charges and costs.
Charge Amount Description Initial charge 0% until 5 April 2021. Annual management charge up to
of net assets. Subject to a minimum investor return of 3%. If investor returns
are between 3% and 4% p.a., the charge will apply on a sliding scale – up to a maximum of 0.5% p.a..
Service charge 1.5% p.a. This covers the costs of running the IHT companies (eg. administration, accounting and other services that Downing provides to Pulford and Bagnall). Life Cover charge
2.25% p.a.* for the first two years.
*calculated on the original gross investment and allocated annually in advance.
Note, VAT will be charged where applicable.
What happens once I've invested?
Once you have invested in the Downing Estate Planning Service we'll send you a letter confirming that we've received your application and allotted your shares. Share allotments happen twice a month.
If you have selected the optional Life Cover policy, we will send you an insurance certificate.
Provided you give us 10 business days' notice, you can access your portfolio twice a month with no charges or penalties.
If you elect to receive regular distributions on a monthly, quarterly, half-yearly or annual basis, these will be paid by a sale of shares from your portfolio. Alternatively, you can elect for any returns generated to remain in the service to enable capital growth.
Note, all distributions are subject to liquidity and Downing’s discretion.
We will provide you with quarterly valuation statements and factsheets to let you know how your investment is doing.