Inheritance Tax Solutions

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

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.

BR 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 BR 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 BR, allowing you to get inheritance tax relief on your investment.

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

Also, the companies within the service could lose their BR qualifying status if the BR 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.