However, if Barbara and Malcolm needed to access that capital during their lifetimes, they could request to sell the shares. The shares would be in their names, in the same way that their existing investments already are.
There are risks involved
Christine explains to Tom that putting money into a BPR-qualifying investment would put Barbara and Malcolm’s capital at risk. The value of their investment, and any income from it, could fall or rise, and they may not get back the full amount they put in.
She adds that HMRC assesses BPR on a case-by-case basis when an estate makes a claim. The ability to claim the relief would depend on the company or companies Barbara and Malcolm invest in qualifying for BPR at the time the claim is made. Tax treatment would also depend on their personal circumstances, and tax rules could change in future.
Tom is also made aware that requests to withdraw might not be able to be met quickly as BPR-qualifying investments have to be made into unlisted or AIM-listed shares. The shares of unquoted companies and those quoted on the Alternative Investment Market can fall or rise by more than shares quoted on the main market of the London Stock Exchange. They may also be harder to sell.
Tom can see that, on balance, it may make sense for his grandparents to sell some of their existing share portfolio and put the proceeds into a BPR-qualifying investment. The investment would likely be higher risk, but it would stay in their name and could potentially be used to keep them in their home for as long as possible, hopefully for the rest of their lives. At the same time, it would be a positive step towards Barbara and Malcolm’s estate planning objective.
Where to learn more
Octopus has a wealth of CPD-accredited estate planning resources for advisers looking to learn more about this area of advice, and about BPR-qualifying investments in particular.
You can find them here.
BPR-qualifying investments are not suitable for everyone. Any recommendation should be based on a holistic review of a client’s financial situation, objectives and needs. 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: June 2020. CAM009736