Why you should consider tax-advantaged investments

Jack Rose

Jack Rose

This has created a positive environment for EIS and VCT managers, with a number of potential deals in which to deploy new cash.

Finally, inheritance tax continues to be an ever-growing problem for advisers and their clients, exacerbated by rising property prices. The result is that a record number of people’s estates are due to pay IHT, and IHT receipts have doubled in the last decade.

In 2017 to 2018 over £5.2bn was collected in IHT receipts, an increase of 8 per cent on the year before. 

Even with the addition of the main residence nil rate band, the Office for Budget Responsibility forecasts inheritance tax revenues are expected to rise by nearly 11 per cent a year for the next four years, to the highest level as a share of the UK economy since the 1970s.

With the nil rate band remaining at its current level until 2020 to 2021, BR strategies offer a simple way for investors to reduce their IHT liabilities after just two years. Furthermore, BR strategies offer a flexibility, control and timescale that traditional estate planning options, such as gifting or trusts, often cannot.

There are a diverse range of EIS, VCT and BR products and managers available across multiple investment strategies and asset classes. The markets for each of these tax-efficient structures is long-established and provides billions of vital investment each year into the UK SME sector.

Each structure provides a different range of tax planning benefits, which can be tailored to the client’s investment objective. These structures can form a valuable part of an adviser’s tax planning arsenal, with demand only set to grow. 

Jack Rose is head of tax efficient products at LightTower Partners