IHT relief using BR
Your shares must be held for two years and at death to qualify for full IHT relief.
Access your funds
Subject to liquidity and product offer.
Control your assets
No need for trusts or power of attorney.
20% downside cover included as standard and if you're less than 90 years old. Optional Life Cover available at an additional fee.
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 is IHT?
Inheritance tax (IHT) is paid on the value of your estate on death. The current 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.
Any part of an estate that's left to your spouse or civil partner is exempt from IHT as long as they permanently reside in the UK.
There are allowances that can help reduce an estate’s inheritance tax bill:
- The nil rate band (NRB) 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 (RNRB) is £175,000 (tax year 2021/22). This applies to the main home if it’s transferred to direct descendants after death.
What is business relief?
The government introduced business relief (BR) in 1976. It was originally set up to allow owner-managed businesses to be passed down to the next generation either IHT-free or at a reduced rate. In 1996, business relief was extended to include investors with shares in qualifying businesses.
These shares must be in unlisted UK trading companies, i.e. those not on a main stock exchange. Some qualifying companies are 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 services offer you the chance to mitigate IHT by using business relief.
What are the key risks of investing in IHT services?
Investing in estate planning services carries risks and is 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 service.
The value of your investment, and any income from it, can go down as well as up. Also, the shares of the companies in an estate planning service can be harder to sell and may go up and down more than larger companies quoted on a main stock exchange. And you cannot rely on the past performance of a service to judge how successful it will be in the future.
BR and IHT relief risks
Business relief is possible if you hold business relief qualifying shares in the service for a minimum of two years and at death. However, business relief is based on personal circumstances, is not guaranteed and the government could change the rules in the future. Also, the companies within the service could lose their business relief qualifying status if IHT 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 services. Please read full details of all the risks here before investing.
What are the benefits of investing for IHT relief?
Downing's IHT estate planning solutions are flexible discretionary managed portfolio services that offer full IHT relief when you hold your investment for at least two years and at death. We only invest in the shares of companies we believe should qualify under business relief legislation so you can receive 100% IHT relief.
Our services give you control and access to your funds with the option to make withdrawals.
On top of that, you can sell shares in a BR qualifying company and reinvest the proceeds in our services without losing the IHT relief if you do so within three years of the sale. The original and 'replacement' shares must be held for at least two out of the last five years and at the time of death.
If you were to die during the first two years, your investment can be transferred to your spouse or civil partner, which avoids restarting the two-year minimum holding period to qualify for IHT relief.
Our standard Downside Protection Cover protects a loss in value up to 20% on your initial net investment (after charges) if you're under 90 years old. The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £500,000).
The Life Cover policy is optional at 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 within two years. The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £250,000).
If you're an investment professional looking to learn more about IHT planning, you can access our series of webinars here.
Your IHT investment options
Downing Estate Planning Service
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.
Downing AIM Estate Planning Service
The Downing AIM Estate Planning Service provides full IHT relief after two years by investing in a diversified target portfolio of 25-40 companies that are listed on AIM and carry out a business relief qualifying trade.
Downing AIM ISA
The Downing AIM ISA Estate Planning Service provides full IHT relief after two years by investing in a diversified target portfolio of 25-40 companies that are listed on AIM and carry out a business relief qualifying trade.
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None of the information provided is investment or tax advice.
You should always read the associated risks before deciding whether to invest. These can be found on the product pages as well as in our risks overview.
Please confirm you have read the information above.