Seneca Vintage is an IHT portfolio targeting a 4% annual return (not guaranteed). It seeks to achieve this by lending money short to medium term to businesses that have some form of asset-backing.
- Asset-backed and secured lending
- 4% annual target (not guaranteed)
- Diverse lending base
- £50,000 minimum investment
Seneca Partners launched in 2010 with founders Ian Currie, Steve Charnock and Richard Manley. The purpose was to invest in small and medium-sized enterprises (SME) and help them grow. All three founders are SME specialists by background. They saw a gap in the market as many SMEs in the north of England couldn’t access capital so they opened six offices across the area to tap into this need. Today Seneca has over £750 million under management across a range of funds, EIS and Inheritance Tax products (as at October 2019).
Target return and strategy
The portfolio aims to return 4% a year and preserve capital. Investors buy into Seneca Secured Lending Ltd (SSL), a BPR-qualifying trading company. SSL provides secured commercial loans in a diverse range of sectors.
There are four potential lending routes: property bridging loans, asset-backed loans, commercial loans, and block discounting. All loans need to be secured against some form of asset. There is a range of short and medium-term loans.
Commercial loans, bridging loans and asset lending form the largest part of the portfolio, with block discounting a smaller percentage. The loans are typically short term, with a conservative loan to value ratio. SSL would have first charge over the property if the borrower defaults. Block discounting, also known as back-to-back finance, involves lending money to other finance providers (e.g. leasing companies) against a specific parcel of loans.
Seneca’s secured lending team is responsible for the day-to-day sourcing and structuring of potential deals. Deals are then passed to Seneca’s credit committee for approval. Seneca has a seven-stage process for the approval of all new loans.
SSL is valued twice a year on 5 April and 30 September. Withdrawals can be made immediately after the two valuation points, with 90 days’ prior notice.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
IHT portfolios are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
Tax rules can change and benefits depend on circumstances. Eligibility for BPR is assessed at the date of death and will depend on the companies in the portfolio remaining qualifying. Broadly speaking, you will need to have held a BPR qualifying stock for at least two years and still hold it on death to qualify.
A previous Chancellor requested a review of IHT to simplify the tax system. A report was published in July 2019, but this has not yet led to any rule changes. Please remember, tax rules can and do change and benefits depend on circumstances.
Charges and savings
A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the IHT companies and/or the underlying businesses. The investment may have additional charges and expenses: please see the provider documents for more details. If you would like a full breakdown or a personal illustration, please let us know.
|Full initial charge||5%|
|Wealth Club initial saving||0.5%|
|Net initial charge through Wealth Club||4.5%|
|Annual management charge||1%|
See example of the total charges over 5 years
Please see the provider's documents for more details on the total fees and charges. If you would like a full breakdown of charges, or a personal illustration, please let us know.
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Portfolio size
- £24.9 million
- Initial charge
- Saving via Wealth Club
- Net initial charge