Business Relief

What is Business Relief (BR)?

Business Relief (BR) was introduced as part of the 1976 Finance Act in order to allow businesses to be passed on through generations without incurring an Inheritance Tax (IHT) liability. The scope of BR has evolved over the years to become a method of investing for individuals looking to reduce a potentially large IHT liability at the time of their death.

Who could benefit from BR investing?

An individual who:

• Wants to shelter their assets from inheritance tax while retaining access to their capital
• Feels they have left estate planning too late
• Has a lasting Power of Attorney in place and wants to mitigate inheritance tax
• Has loan trusts and is concerned about the inheritance tax due on the initial capital
• Is an individual looking to set up a family investment company with inheritance tax efficiency
• Has sold their business within the last three years
• Is a trustee looking to mitigate the impact of periodic charges or exit charges
• Would like to put more than the Nil-Rate Band (NRB) into a discretionary trust

What are the benefits of BR?

Access and Control: Unlike a trust-based plan, with a BR investment you maintain full control of and access to your money at all times.

Rapid IHT Exemption: Unlike gifts and trusts, which typically take up to seven years before they are fully exempt from IHT, BR-qualifying investments are IHT exempt after just two years provided that the investments are still held at the time of death.

Inter-Spousal Transfer: Should you die before the two-year qualifying period is complete, your shares can be passed on to your spouse or civil partner without resetting the two-year clock. 

Simplicity: BR investments are relatively straightforward. Generally there are no complex legal structures. There will not be a requirement for medical underwriting regardless of age or health.

More benefits include...

Conservative Investment Mandate: The Investment Manager will typically look for companies that have predictable revenue streams and are backed by easily valued assets. Investments in companies in sectors such as infrastructure can earn government-backed subsidies for as much as 20 years.

No Impact on Nil-Rate Band (NRB): BR planning does not affect the NRB thus complementing and legislatively diversifying other Trust and Gift-based IHT planning that does impact the NRB.

Replacement Property Provision: Qualifying BR investments can be switched to an alternative BR qualifying investment without restarting the two year clock.

Succession Planning: When passed to a beneficiary, BR assets remain, in some circumstances, exempt from IHT.

Age is Just a Number: There is no age limit for investment into BR, so it's never too late or early to consider.

The Risks

Tax rules are subject to change.

If you do not hold the investment at the time of death, you will lose the tax exemption.

Investing in small companies is inherently risky. These companies may not perform as hoped and in some circumstances may fail completely.

Your capital is at risk; You may not get back as much as you put in and in the worst case scenario you could lose all of your capital.

BR investments should be considered as a longer term investment and may be higher risk and more difficult to realise than other securities listed on the London Stock Exchange.

Business Relief Products

Foresight has three Business Relief products. The Foresight Inheritance Tax Solution ("Foresight ITS") and Foresight Accelerated Inheritance Tax Solution ("Foresight AITS"), which together constitute the Foresight Inheritance Tax Fund, and the Foresight Enhanced Inheritance Tax Fund ("Foresight Enhanced IHT").

Averon Park is the company in which investments have been made by Foresight on behalf of the investor in the Foresight Inheritance Tax Fund. To find out more about Averon Park and its trading interests, click here.

Click on the links below to find out more about each product.

Video Library

Below you'll find links to case study animation videos as well as other useful videos on the benefits of both Foresight ITS and Foresight AITS.

Client Planning Scenarios

Our planning scenarios illustrate how tax-efficient investments can be used to address the diverse needs of clients. To see the rest of our client scenarios, click here to visit our literature library.

Important Information

Capital is at risk. The value of an investment, and any income from it can fall as well as rise and investors may not get back the full amount they invest. Foresight Inheritance Tax Solution and Accelerated Inheritance Tax Solution (“ITS” and “AITS”) should be considered longer-term investments and may be higher risk and more difficult to realise than an investment in listed securities. Tax reliefs are dependent on investee companies continuing to qualify for Business Property Relief and investors’ individual circumstances. Current tax rules are subject to change. A failure to meet the BPR qualifying requirements could result in the investments losing their inheritance tax exempt status, resulting in adverse tax consequences for investors.

AITS is a part of the ITS Fund and is an integrated Business Relief and insurance solution that gives investors immediate inheritance tax mitigation. For investment in the AITS Fund, insurance cover is only available to investors who meet the eligibility criteria for the relevant Insurance Category. Failure to meet such criteria or a misrepresentation in the eligibility declaration could result in the Insurer refusing to settle an investor’s claim under the Insurance Policy.

Investors should only invest in ITS and AITS on the basis of information contained in the applicable Documentation (including any Brochure, Fund Prospectus, Offer Documents, Key Information Documents and Disclosure Documentation) or Terms and Conditions of Investment as appropriate. Please refer to our Risk Warnings page for full general and specific risk information.