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Your capital is at risk and you may not get back the full amount you invested. VCT investments are long term and high risk. Tax reliefs are subject to change and depend on personal circumstances. Past performance is not a reliable indicator of future performance. Please read full details of the risks here.

Your capital is at risk, and you may not get back the full amount you invested. Any investment should only be made based on the relevant product literature and your attention is drawn to the risk, fees and taxation factors contained therein.

Inheritance Tax Solutions

Estate planning using Business Relief

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Understanding inheritance tax and business relief

Inheritance tax (IHT) is paid on the value of an estate on death. The current tax charge is 40% on the value of the estate above £325,000 (the nil rate band).

Business relief (BR) is a tax relief for people who invest their money into UK trading businesses. Investors must hold the qualifying shares for a minimum of two years and at the date of death. The two-year holding period begins from the date your shares are purchased. The value of the shares can then be left to your beneficiaries completely free of inheritance tax.

The benefits of a business relief solution

A fast track to IHT relief while retaining access to your funds if needed in the future.

IHT free after two years

With a BR-qualifying investment, investors' shares become eligible for 100% inheritance tax relief after just two years, as long as the shares are held at the time of death.

Control and access

Our inheritance tax solutions allow investors to request access to their funds at any time, either in full or to provide an income. This subject to liquidity and the terms of the product offer.

Investment insurance

As standard and at no extra cost, investors' funds are protected from any fall in value of up to 20% of initial net investment (for investors under 90 years old).
Optional life cover is also available for an additional fee.

What is Business Relief?

IHT investment products

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Downing Estate Planning Service

The Downing Estate Planning Service looks to provide full IHT relief after two years by investing in BR-qualifying businesses predominantly in two sectors: asset-backed trading businesses (such as care homes) and renewable energy & infrastructure. The target return on your investment (after charges) is 3%-4.5% per annum over the medium term.

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Downing AIM Estate Planning Service

The Downing AIM Estate Planning Service looks to provide full IHT relief after two years. The Service looks to provide growth by investing in a diversified portfolio of 25-40 companies that are listed on the Alternative Investment Market (AIM).

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Downing AIM ISA

The Downing AIM ISA Estate Planning Service looks to provide full IHT relief after two years. The Service looks to provide growth by investing in a diversified portfolio of 25-40 companies that are listed on the Alternative Investment Market (AIM). This is held in an ISA wrapper for further tax benefits.

FAQs on IHT solutions and BR

Below are a series of questions to help you understand our product offering. If you have any additional questions, please do not hesitate to reach out to us.

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What is IHT? A deeper dive
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Inheritance tax (IHT) is paid on the value of your estate on death.

The current inheritance tax charge is 40% on the value of your estate above £325,000 and is applied to the combined value of your property, cash and other assets after any remaining debts, such as a mortgage, have been paid off.  

There are allowances that can help reduce an estate’s inheritance tax bill:

- The nil rate band is £325,000 per person. This is the amount of an estate that can be passed on tax-free. Spouses and civil partners can transfer part or all of their unused nil rate band to each other but conditions apply  

- The residence nil rate band is £175,000 (tax year 2027/28). This applies to the main home if it’s transferred to direct descendants after death

What is business relief? A deeper dive
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The government introduced business relief (BR) in 1976.

It was originally set up to allow business owners to pass down their businesses to the next generation, IHT-free.

Business relief has since been updated to include minority shareholders in qualifying businesses. These shares must be in unlisted UK trading companies, i.e. those not on a main stock exchange, or can be listed on the Alternative Investment Market (AIM) or NEX Exchange Growth Market.

To qualify for IHT exemption the business relief qualifying shares must be held for two years and at the time of death.

Downing’s estate planning solutions offer you the chance to invest in businesses that we believe qualify for business relief, allowing you to get inheritance tax relief on your investment.

What are the risks?
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Investing in estate planning solutions carry risks and are not suitable for everyone.

You should be comfortable with taking on these risks and we recommend that you seek financial advice before you put your money into an estate planning solution.

Investment risks

The value of your investment can go down as well as up. Also, shares in smaller companies can be harder to sell and may go up and down more than larger companies quoted on a main stock exchange.

You cannot rely on the past performance of an investment to judge how successful it will be in the future.

BR and IHT relief risks

Business relief is possible if you hold qualifying shares for a minimum of two years and at death. However, business relief is not guaranteed. It is dependent on the business continuing a qualifying trade.

Also, the companies within the service could lose their business relief qualifying status if the business relief rules change, which could result in an IHT liability on your investment.  

Please note this is only a brief overview of the risks involved with investing in IHT solutions. Please read full details of all the risks within the appropriate product literature before investing.

How to invest

It is important that both advisers and investors understand our products thoroughly, paying attention to any risks involved before investing. Our dedicated team is always on hand to answer any questions you may have.

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Find the right product

At Downing we are committed to ensuring our investors are matched with the right product for them. We encourage investors to read our product literature thoroughly and understand the risks.

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Speak to an adviser

At Downing, we are not able to provide financial advice.
Investors should consult their financial adviser before making any investment. A financial advisor can help you to plan properly towards your financial goals.

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Invest with Downing

When investors are ready to invest they and their adviser should complete the appropriate application form that will be found on the relevant product pages.

£5.5 trillion will pass between generations over the next 30 years, and that wealth transfer is set to rise to

£100 billion by 2025

Wealth Transfer in the UK, Kings Court Trust, 2017

We're here to help

If you are a financial adviser or discretionary fund manager, and you want to discuss our IHT products and solutions, call  020 7630 3319 or email us at sales@downing.co.uk

If you are a private investor call 020 7416 7780 or email customer@downing.co.uk