Overview

Graham Neale
Partner, Asset Management

What is it?

A managed service that seeks to mitigate Inheritance Tax (IHT) and generate capital growth, investing over the long-term into shares of smaller companies, which we expect to qualify for Business Property Relief (BPR).

Why Killik & Co?

The team specialises in research into smaller companies and shares are selected on their growth potential over the long-term, not simply the tax benefits, making the service particularly useful for intergenerational planning.

Each portfolio is a segregated portfolio of shares, offering complete transparency of the individual investments.

Investment into the service is incredibly flexible and available via the Killik & Co ISA as well as via existing ISA portfolios. The Inheritance Tax Portfolio can also be held in either single or joint accounts.

Who is it right for?

This service may be of interest for those prepared to take a higher degree of risk, looking for a long-term investment into smaller companies, which has the benefit of helping mitigate exposure to IHT.

The Service

In the absence of any Inheritance Tax planning, your estate is liable to be charged 40% of its value in excess of the IHT threshold, currently £325,000 for an individual or £650,000 for a married couple or civil partners.*

The Inheritance Tax Portfolio Service seeks to mitigate some of this IHT liability by investing in a portfolio of companies listed on AIM that we expect to qualify for Business Property Relief (BPR). Once fully invested and assuming you survive for two years, the value of the portfolio at the time of your death should sit outside of your estate for IHT purposes.

Returns from smaller companies can be volatile and shares in smaller companies are typically riskier than those of larger “Blue-chip” stocks. You and/or your beneficiaries therefore need to have a long-term time horizon which we would describe as being ten years or more. We seek out companies that have the ability to grow their profitability over time, thereby generating capital growth, however the portfolio will typically generate little or no dividend income.

*Please speak to your adviser to discuss the impact of the forthcoming Primary Residential Allowance.

You are able to invest in the IHT Portfolio Service using your ISA wrapper, enabling you to take advantage of the usual Income and CGT benefits in addition to any potential IHT benefits.

Find Out More

To find out more about our IHT Portfolio, please contact your nearest branch or contact our Head Office on info@killik.com or +44 (0) 20 7337 0777 or alternatively fill out the form below to download the brochure.

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Business Property Relief (BPR)

Originally designed to prevent the break-up of smaller (typically family-owned) businesses in order to meet their Inheritance Tax bills, BPR has since been expanded to cover a wide range of business assets, including the shares of certain companies listed on the London Stock Exchange’s Alternative Investment Market (AIM).

After two years, assets that have remained qualifying for BPR and are held at the time of death, are deemed to sit outside of your estate when calculating any IHT liability.

Risk Factors

Investments in smaller companies, whether quoted or unquoted, carry a higher degree of risk than investing in more liquid shares of larger companies. AIM investments are generally more volatile in price than shares on the Official List and may be impossible to sell at a time of your own choosing.

As is the nature of investing, the value of your investments will rise and fall over time. Please do not assume that past performance will repeat itself and you must be comfortable in the knowledge you may receive less than you originally invested. Ultimately this may outweigh any tax benefits.

Governments can and do change the tax rules. Although this service can help mitigate IHT, it will not be suitable for everyone and there may be other tax planning methods available that are more suitable for you. If you are unsure you should always seek independent financial planning and tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.