Seneca Inheritance Tax Service – coming soon
The Seneca Inheritance Tax Service gives experienced investors an opportunity to protect their assets from inheritance tax. After two years, the investment should benefit from IHT relief, provided it is still held on death. The service aims to deliver a modest return via a choice of growth or income shares over the investment period, not guaranteed.
The service is expected to be available soon – please register below to receive an alert.
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Overview of the service
Below we give a brief overview of the service. Once the service becomes available, we'll provide a full review, alongside the offer documents and the option to apply online.
Seneca Partners – the Portfolio Manager for the service – was launched in 2010 by founding partners Ian Currie, Tim Murphy and Richard Manley to provide finance to small and medium-sized enterprises (SME) and help them grow. All three founders are SME specialists by background and believed many SMEs in the North of England, where Seneca is based, were unable to access the capital needed to grow.
Today, Seneca Partners offers equity, debt, corporate finance and debt advisory services across a range of specialist divisions within the Seneca Group. The business employees over 100 people and manages a total of £594.8 million (March 2020) across its services.
The Seneca Inheritance Tax Service is a discretionary service managed by Seneca Partners. Seneca Partners uses investor capital to purchase shares in one or more investee companies. These shares are expected to qualify for Business Relief once you have held them for two years.
The service has three objectives:
- To invest in such a way that qualifies for 100% IHT relief after two years
- To reduce the risk to investors’ capital
- To generate a target return of 4% p.a.
Investors in the service can choose to receive their returns via income or capital growth.
The service targets a return of 4% p.a. after fees over the holding period – not guaranteed.
A choice of Income or Growth
The Seneca Inheritance Tax Service offers investors a choice of income or growth shares, or a combination of both. Investors opting for income will have non-cumulative preference shares bought on their behalf. These entitle the holder to a non-cumulative dividend of 4% per annum, paid quarterly – not guaranteed and subject to the financial performance of the investee company. Income investors should be aware non-cumulative preference shares do not pay any previously unpaid or omitted dividends. The maximum income one can receive is 4% per annum, whereas it is possible to exceed the 4% return with the growth shares. Although this is deemed unlikely.
Examples of portfolio assets
SSH1 Angel Limited – residential property (social housing)
The counterparty to which SSL lends is SSH1 Angel Limited, which specialises in the provision of housing stock to social housing operators under long-term contracts.
As at end September 2020, SSH1 Angel had a portfolio of more than 100 residential properties in the North East and Yorkshire used for social housing – the provision of houses to some the most vulnerable, including the homeless and those with additional needs, such as disabled or those with developmental challenges.
SSL finances these properties by way of senior secured debt, much like a traditional mortgage provided would lend against residential housing.
Supermarket and car park let to Tesco subsidiary – commercial property
SSL provided a loan to Seneca Property 105 Limited, to part-finance the purchase of a supermarket asset currently let to Tesco Plc and occupied by a Jack's store.
The asset is a 45,286 sq ft purpose-built modern supermarket developed in 2014 occupying approximately 4.09 acres (c25% site coverage) in Immingham (North East Lincolnshire) town centre.
The asset was purchased in April 2020 for £8.5 million and currently generates annual rental income of £771k.
Glenside Finance Limited – vehicle financing
Glenside Finance is a specialist car finance provider, a member of the Consumer Credit Trade Association and Authorised and Regulated by the Financial Conduct Authority. Glenside is focused on providing loans between £5,000 and £20,000 and currently has more than 800 customers and a loan book in excess of £4.5 million.
The company is growing and operates with high customer service levels and puts affordability at the centre of its lending decisions.
Seneca Secured Leasing provides loans to Glenside Finance to facilitate its lending activities and has a floating charge over the assets of Glenside.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
The IHT service contains assets which are high risk and should only form part of a balanced portfolio, you should not invest money you cannot afford to lose. The service invests in illiquid assets which may be hard to sell or 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.
15 investors have passed away since the service launched, in every one of these cases, their investments have qualified for business property relief where the investor died after two years.
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.
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.
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