Business Relief can also be applied to land – forestry, farmland, property development and solar energy. These assets offer the security of real assets as well as the potential for growth and income. But, as with EIS investments, liquidity needs to be taken into consideration. The rules allowing Business Relief to be applied to trading businesses open up the opportunity to create what is in essence your client’s own small family office.
By setting up a bespoke serviced company, 100 per cent owned by the client, structured as a discretionary investment portfolio investing in land, property or securitised assets, you can take full advantage of Business Relief and manage income tax efficiently too – paying dividends rather than income.
This arrangement, done through a specialist company that manages the assets within the client’s specific risk reward parameters and deals with the filing of accounts and returns, can open up the opportunity for an adviser to generate significant value for their client. The arrangement can be used for single or multiple beneficiaries and with an investment minimum of £40,000 per company.
Business Relief is designed to encourage investment in small businesses and to fuel an entrepreneurial spirit in Britain. It has widespread applications for investors seeking to mitigate the growing threat of IHT. Crucially, it opens up solutions that allow clients to retain control of their assets – for however long they live.
Jonathan Gain is chief executive of Stellar Asset Management
