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  • Inheritance Tax Investments

    Passing on your wealth tax-efficiently

OUR ESTATE PLANNING SERVICE

Oxford Capital Estate Planning Service

Investments that could qualify for relief from Inheritance Tax.

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UP TO 100% RELIEF FROM INHERITANCE TAX

Business Property Relief (‘BPR’, also referred to as Business Relief) allows ‘Business Property’ to be passed on to the beneficiaries of an estate without being subject to Inheritance Tax.

To qualify for BPR, the Business Property must have been owned for at least two years and still be held at death. BPR is particularly important for business owners. For example, without BPR it would often be impossible for a family business to be passed from one generation to the next. If the company was considered part of the deceased’s taxable estate, the beneficiaries would most likely be forced to sell it in order to pay the Inheritance Tax liability.

But it is not just entrepreneurs who can benefit from BPR. Shares held in some types of unquoted trading companies can currently be classified as ‘Business Property’, regardless of whether the owner of the shares is directly involved in the management of the company.

THE OXFORD CAPITAL ESTATE PLANNING SERVICE

Through the Oxford Capital Estate Planning Service we offer clients access to investments which could qualify for BPR. This is an investment opportunity which provides a straightforward method of acquiring shares in unquoted trading companies. It aims to preserve the value of your capital, targeting modest growth at a rate slightly above inflation. If your personal circumstances or investment strategy change, you can ask to withdraw part or all of your investment. We will usually aim to fulfil your request by selling your shares. However, there is no ready market for unquoted securities, so the return of capital to you may depend on us being able to sell your shares to other investors in the Oxford Capital Estate Planning Service.

You can read more about the Oxford Capital Estate Planning Service here.

COMBINING THE ENTERPRISE INVESTMENT SCHEME WITH BUSINESS PROPERTY RELIEF

EIS investments, including those available through the Oxford Capital Infrastructure EIS and Oxford Capital Growth EIS, have the potential to qualify for BPR as well as EIS advantages including income tax relief and tax-free gains.

However, it is important to note that EIS investments are illiquid – if the investor dies, EIS shares will be passed to the beneficiaries who will not be able to access the capital until the company is sold (for example, through an acquisition by a larger competitor) or lists on a stock exchange.

It is also possible that EIS investments will be sold while the investor is still alive, prompting a return of capital. If the proceeds cannot be reinvested into other BPR-qualifying assets before the investor dies, then the capital will not be protected from BPR. By contrast, investments focused purely on BPR can often be simply left in place until the investor’s death.

Estate Planning - Longevity Calculator

Investments that qualify for Business Property Relief (BPR), can be exempt from Inheritance Tax after just two years, if you still own them when you die.

Other Inheritance Tax strategies, such as lifetime gifting, take seven years to be effective.

This means that, as we get older, using BPR can significantly increase the chances of successful Inheritance Tax mitigation.

If you're aged between 65 and 95, use this calculator to compare average two-year and seven-year survival rates for your age and gender. The calculator uses life expectancy data from the Office of National Statistics, published in 2015.

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