Nonetheless, it’s a very welcome side-effect. Welcome for the adviser, who now has more assets under advice. And welcome for the client, because their adviser is now in a better position to see the whole picture and advise accordingly.
Whether or not a client eventually uses BPR as a solution, discussing it as part of the estate planning conversation can help more clients feel confident about taking action. So it’s an area of the market that’s worth being proficient in, because it can unlock some valuable situations.
Of course, BPR-qualifying investments won’t be suitable for every client. They put investors capital at risk, meaning the value of an investment and any income from it could go down as well as up. Investors could get back less than they invest. Clients should also understand that the value of inheritance tax relief will depend on an investor’s personal tax situation, and on tax legislation which could change in future. Tax relief depends on portfolio companies maintaining their qualifying status.
In addition, AIM-listed and unquoted shares can fall or rise in value more than shares listed on the main market of the London Stock Exchange. They can also be harder to sell. This is particularly relevant for clients who are considering BPR as a way to retain access to their assets.
Where to find out more
As I say, there’s a planning scenario that looks specifically at a situation where a client has an estate planning need but wants to stay in control of their capital.
It includes a client-friendly video, which you may want to show to a client to help them see how this type of investment works.
You can access this planning scenario here.
1 Unlocking Estate Planning: How Business Property Relief is opening doors for advisers, published by Octopus Investments, February 2020
BPR-qualifying investments are not suitable for everyone. Any recommendation should be based on a holistic review of your 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: July 2020. CAM009960.
