Inheritance Tax Portfolios

Inheritance tax, or IHT, is generally considered the most unfair tax of all. It could apply on estates over the value of £500,000. This is made up of the “residence nil rate band” of £175,000 (from 6 April 2020) plus the current “nil rate band” of £325,000. Anything over this could potentially be subject to 40% tax on death, or your spouse's or partner's death if later.

The good news is that careful planning can reduce or even wipe out completely your estate’s IHT liability without losing control of your assets in your lifetime. 

For those prepared to take greater investment risk, one way to shelter your wealth from IHT is to invest in assets that qualify for Business Property Relief (BPR). You can:

  • Invest unlimited amounts in unquoted or some AIM companies 
  • Hold AIM investments in your ISA, so you can benefit from tax-free growth and tax-free income
  • Retain control and ownership of your investment
  • Select investments that aim to pay you a regular income and/or help preserve capital
  • Full IHT relief after just 2 years under current rules – quicker than with most other IHT-mitigation strategies

Please remember tax rules can change and benefits depend on circumstances. IHT portfolios are just one of the ways to mitigate IHT and are exclusively for experienced investors. If in doubt, please seek specialist advice.

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Downing Estate Planning Service

Downing's focus on asset-backed businesses trading from freehold premises combined with energy infrastructure assets makes this an interesting choice for investors.

Property & renewables £523.0 million 4.0% 3.0% 1.0% 0.5%  
Seneca Vintage

Seneca Vintage prioritises capital preservation but also aims for an annual uplift in the net asset value of each investee company of 4%. Seneca makes loans to qualifying companies via a portfolio approach to lending. Four investment pillars are central to guiding their lending: diversification, credit policy, prudence and asset security.

Lending £24.9 million 5.0% 0.5% 4.5% 1.0%  

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