Tue, 08/07/2014 - 14:10
Seneca Partners has launched an inheritance tax (IHT) service that allows investors to protect their legacy from IHT – while at the same time giving a helping hand to British businesses.
The Seneca Inheritance Tax Service – which is the first of its kind in the UK – is aimed at people who are keen to protect their legacy from IHT.
It uses the well-established principles of Business Property Relief (BPR), which was introduced in 1976 and allows investors in unquoted shares to qualify for IHT exemption once the assets have been held for two years.
It is the only service of its kind to match up investors seeking to exempt their assets from IHT with quality businesses that are seeking to borrow.
Investors buy shares in a limited company – Seneca Secured Lending – that offers short and medium-term, fully secured loans to suitable businesses.
After two years, the shares should qualify for BPR and be fully exempt from IHT.
Investors retain ownership of their assets, and can withdraw them at any time (with three months’ notice) – but they must remain invested for two years in order to qualify for IHT relief.
Ian Battersby, of Seneca Partners, says: “Our new inheritance tax service is a unique proposition that allows people to protect their estate from inheritance tax, while at the same time providing much-needed finance to British businesses.
“Its appeal to those planning their legacy is clear – not only can it exempt part of their estate from IHT in just two years, but in addition it doesn’t require investors to give away their assets as is the case with some other IHT strategies.
“They will also have the satisfaction of knowing that they are sparing their children a potentially large IHT bill, while playing a vital role in helping ambitious businesses to grow.
“We’re delighted at the levels of interest shown already – GBP10million has been invested in just a few months and we expect to exceed the GBP20 million mark by the end of the year.”
The service’s appeal has been boosted by the combination of rapidly rising house prices and the freezing of the IHT threshold until 2019. Together these factors are making thousands more families liable for IHT.
With the high street banks still frequently unable – or unwilling – to lend to SMEs, businesses’ demand for loans from the service is proving strong too. Loans are typically fully secured on property, company or personal assets.
While the primary investment goal of Seneca Secured Lending is the security and preservation of capital, the company still aims to deliver net capital growth for investors of four per cent per annum. Seneca Partners charges a one-off initial fee of two per cent on investments made into the scheme, but there are no annual management charges to pay.
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