Being able to make immediate withdrawals from a BPR-qualifying investment can never be guaranteed. Qualifying shares may be harder to sell than shares listed on the main market of the London Stock Exchange. Their value can also be more volatile.
Based on her objectives and attitude to risk, Julie’s adviser recommends she makes a £1 million BPR-qualifying investment, which she is content to do.
Four years later, Julie feels happy to settle this investment into trust
While BPR-qualifying investments that have been held for two years are zero-rated for inheritance tax, they still count as part of the estate when working out whether the RNRB taper threshold applies.
Four years later, at her review, Julie agrees with her adviser that she is now comfortable to relinquish ownership of some of her assets. Her adviser mentions that because she has held the investment for more than the two-year qualifying period, there would be no chargeable lifetime transfer if she settled the investment into a discretionary trust. Doing so would immediately bring the value of her estate below £2 million, allowing it to claim the full RNRB allowance.
By this point, Julie already thinks of those assets as being for her children and grandchildren. So she’s happy to settle the BPR-qualifying investment into trust in order to free up her full RNRB allowance.
This is one example of how a conversation about BPR-qualifying investments can help a client take the next step in their estate planning. As I noted earlier, though, BPR-qualifying investments put capital at risk. Tax treatment depends on individual circumstances, and tax rules could change in future. Companies invested in need to maintain their BPR-qualifying status.
Join us for The Estate Planning Show
In May, as part of The Estate Planning Show, my colleagues and I will be looking in more detail at how advisers can unlock more estate planning conversations. I hope you can join us. You’ll find full details at octopusinvestments.com/estate-planning-show/.
We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London EC1N 2HT. Registered in England and Wales No.03942880. Issued: April 2020. CAM009541.
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