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The estate planning landscape in 2022

Once a BR-qualifying investment is held for two years it becomes zero-rated for IHT. The client must also hold the investment until death, at which time it should pass on free from IHT. 

In return for making a higher risk investment, clients can benefit from a two-year clock – that’s significantly shorter than the seven years that are typical for gifts to become fully exempt. 

Because the client is making an investment, it also means they can request access to their capital at any time. This is, of course, subject to liquidity being available. 

Feel confident recommending BR

BR is more than 40 years old and has stood the test of time. It’s been supported by all governments in place during that time and, although changes have been made to it, they have all been to broaden its scope and make it more generous, rather than to limit its use. 

BR-qualifying investments are made in unlisted and AIM-listed trading businesses, operating in a wide range of sectors. These companies help build a better future acting as a hub for productivity and employment, not just through jobs they create themselves but through the industry that can build up around them. 

As they are unlisted or AIM-listed trading companies, this brings inherent risks for investors. So the tax relief is available to compensate for some of that risk. 

Bear in mind the risks

When it comes to BR-qualifying investments, you should remember that the value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.

Tax treatment depends on individual circumstances and tax rules could change the in the future. Tax relief depends on portfolio companies maintaining their qualifying status. The shares of smaller and unquoted companies could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell.

Come to your local Octopus Live 2022

Our popular estate planning seminars are back on the road!

We’ll be running 21 events across the UK this summer, where you can find out more about estate planning in 2022. As well as refreshing your knowledge of IHT, we’ll help you identify clients who could benefit from a conversation about inheritance tax, and we’ll cover key inheritance tax planning strategies, including the use of Business Relief.

Find your nearest event here

Jessica Franks, Head of Retail Investment Products, Octopus Investments

1https://www.thetimes.co.uk/article/why-we-are-going-to-be-paying-more-tax-and-how-to-protect-yourself-3wb7xbwqd

2https://www.ftadviser.com/investments/2022/03/23/scale-of-the-uk-inflation-shock-revealed/

3https://www.thetimes.co.uk/article/huge-rise-in-1-million-homes-across-the-uk-mcrrs7ttl

4https://www.ftadviser.com/your-industry/2022/03/31/families-could-pay-37bn-in-iht-in-next-five-years/

For professional advisers and paraplanners only. Not to be relied upon by retail investors.

The investments discussed are not suitable for everyone. This communication does not constitute advice on investments, legal matters, taxation or any other matters. Any recommendation should be based on a holistic review of your client's financial situation, objectives and needs. 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 2022. CAM011996