How does an investment in a Business Relief solution compare to other estate planning solutions?
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A question that is typically asked by potential advisers is how an investment in a Business Relief solution (such as an investment in the Ingenious Estate Planning service) compares to other estate planning solutions.
Other solutions typically include gifts or trusts, however, these can take 7 years to obtain full Inheritance Tax relief whereas with a Business Relief qualifying solution an investment will benefit from relief after just two years or immediately following share allotment via an investment in IEP Apex1.
| Estate Planning Solution | Advantages | Disadvantages |
| Ingenious Estate Planning services | - Just two years to benefit from Business Relief - IEP Apex investors immediately benefit from Business Relief once shares have been allotted1 - Can benefit from Replacement Business Relief if using the proceeds from a previously Business Relief qualifying investment - Retain control - Potential for capital growth - Full access (subject to liquidity) | - Unquoted - Not ISA eligible - General business risks - High risk investment with possible loss to capital - Tax rules may change - Age and Health status restrictions for IEP Apex |
| Lifetime gifts | - Easy | - Will take 7 years to fall entirely outside of an estate for Inheritance Tax purposes - Loss of control of assets - Other tax implications (such as Capital Gains Tax) |
| Trusts | - Can be easily tailored/structured to client needs and requirements - Can be combined with an investment in the Ingenious Estate Planning service | - Immediate Inheritance Tax liability if thresholds (such as Nil Rate Band) are exceeded - Periodic and exit charges - No access, but settlor may have some control of assets depending on legal structure - Complicated - Costly to run |
| AIM investments | - Just two years to benefit from Business Relief (albeit on a reduced basis as announced at Budget 2024) - ISA eligible - Independent pricing and regulated market - Retain control - Potential capital growth | - Reduced Business Relief benefit when compared to other Business Relief solutions such as an investment in the IEP Services - Not all AIM companies will qualify for Business Relief - Valuation volatility |
| Life assurance | - Pays Inheritance Tax bill with sum insured - Can cancel the policy (subject to costs) | - No capital growth - Age and health status restrictions |
1Subject to meeting eligibility criteria
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Ingenious Insights FAQs
01
What is Inheritance Tax and who pays it?
02
What is Business Relief?
03
What benefit does an investment within the Ingenious Estate Planning service provide?
04
How does an investment in a Business Relief solution compare to other estate planning solutions?
05
Business Relief and Trusts
06
My client already holds a Business Relief qualifying asset. Can they redeem the asset and invest in an Ingenious Estate Planning solution and immediately benefit from Business Relief?
07
Can my client borrow funds to make a Business Relief qualifying investment?
08
Once an investment is made, can my client easily access their investment at a later date and what might be the associated tax implications?
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