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Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Implications of holdings qualifying for Business Relief (BR) assets
Understand the implications of holding Business Relief Qualifying assets for two years and its impact on Inheritance Tax liability.
Terminology explained
Holding period
The holding period refers to the minimum time an asset must be retained to qualify for certain tax reliefs. Shares in Business Relief-qualifying companies, must be held for at least two years by the deceased before their death to be exempt from IHT.
Scenario background
Isabel
Isabella is 84 years old
She has never been married and intends to leave her entire estate to her niece. She owns her house, and holds other liquid investments.
She has not previously considered her Inheritance Tax (IHT) position, but following a recent health scare is now considering the succession of her estate.
She is concerned she may not live another seven years and is therefore considering making some qualifying BR investments using excess liquid wealth.
Scenario 1
- If Isabel were to die without undertaking any further action her IHT position would be calculated as follows:
Isabel's Inheritance Tax (IHT) position
Scenario 2
- If Isabel were to invest 50% of her liquid assets in qualifying BR investments (which could qualify for BR at 100%), then provided she survived two years from the date of making the investments (and continued to hold them until her death), then her revised position would be as follows:
Isabel's Inheritance Tax (IHT) position
Takeaway
The two scenarios above show how the use of BR assets can reduce IHT exposure by up to 40% on the chargeable death estate.
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Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.
Important notice: This article is for investment professionals only. This article is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.
This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.
Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Implications of holdings qualifying for Business Relief (BR) assets
Understand the implications of holding Business Relief Qualifying assets for two years and its impact on Inheritance Tax liability.
Terminology explained
Holding period
The holding period refers to the minimum time an asset must be retained to qualify for certain tax reliefs. Shares in Business Relief-qualifying companies, must be held for at least two years by the deceased before their death to be exempt from IHT.
Scenario background
Isabel
Isabella is 84 years old
She has never been married and intends to leave her entire estate to her niece. She owns her house, and holds other liquid investments.
She has not previously considered her Inheritance Tax (IHT) position, but following a recent health scare is now considering the succession of her estate.
She is concerned she may not live another seven years and is therefore considering making some qualifying BR investments using excess liquid wealth.
Scenario 1
- If Isabel were to die without undertaking any further action her IHT position would be calculated as follows:
Isabel's Inheritance Tax (IHT) position
Scenario 2
- If Isabel were to invest 50% of her liquid assets in qualifying BR investments (which could qualify for BR at 100%), then provided she survived two years from the date of making the investments (and continued to hold them until her death), then her revised position would be as follows:
Isabel's Inheritance Tax (IHT) position
Takeaway
The two scenarios above show how the use of BR assets can reduce IHT exposure by up to 40% on the chargeable death estate.
-------
Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.
Important notice: This article is for investment professionals only. This article is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.
This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.
Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Terminology explained
Holding period
The holding period refers to the minimum time an asset must be retained to qualify for certain tax reliefs. Shares in Business Relief-qualifying companies, must be held for at least two years by the deceased before their death to be exempt from IHT.
Scenario background
Isabel
Isabella is 84 years old
She has never been married and intends to leave her entire estate to her niece. She owns her house, and holds other liquid investments.
She has not previously considered her Inheritance Tax (IHT) position, but following a recent health scare is now considering the succession of her estate.
She is concerned she may not live another seven years and is therefore considering making some qualifying BR investments using excess liquid wealth.
Scenario 1
- If Isabel were to die without undertaking any further action her IHT position would be calculated as follows:
Isabel's Inheritance Tax (IHT) position
Scenario 2
- If Isabel were to invest 50% of her liquid assets in qualifying BR investments (which could qualify for BR at 100%), then provided she survived two years from the date of making the investments (and continued to hold them until her death), then her revised position would be as follows:
Isabel's Inheritance Tax (IHT) position
Takeaway
The two scenarios above show how the use of BR assets can reduce IHT exposure by up to 40% on the chargeable death estate.
-------
Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.
Important notice: This article is for investment professionals only. This article is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.
This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.
Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
Terminology explained
Holding period
The holding period refers to the minimum time an asset must be retained to qualify for certain tax reliefs. Shares in Business Relief-qualifying companies, must be held for at least two years by the deceased before their death to be exempt from IHT.
Scenario background
Isabel
Isabella is 84 years old
She has never been married and intends to leave her entire estate to her niece. She owns her house, and holds other liquid investments.
She has not previously considered her Inheritance Tax (IHT) position, but following a recent health scare is now considering the succession of her estate.
She is concerned she may not live another seven years and is therefore considering making some qualifying BR investments using excess liquid wealth.
Scenario 1
- If Isabel were to die without undertaking any further action her IHT position would be calculated as follows:
Isabel's Inheritance Tax (IHT) position
Scenario 2
- If Isabel were to invest 50% of her liquid assets in qualifying BR investments (which could qualify for BR at 100%), then provided she survived two years from the date of making the investments (and continued to hold them until her death), then her revised position would be as follows:
Isabel's Inheritance Tax (IHT) position
Takeaway
The two scenarios above show how the use of BR assets can reduce IHT exposure by up to 40% on the chargeable death estate.
-------
Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.
Important notice: This article is for investment professionals only. This article is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.
This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.
Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
Claim your CPD Certificate
Complete the form below to secure your Continuing Professional Development (CPD) certificate.
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