Alan’s adviser explains the risks
John makes it clear to Alan that the value of any BPRqualifying investment, and any income from it, can fall or rise. Alan may not get back the full amount he invests.
John also explains that BPR is assessed by HMRC on a case-by-case basis, and that this assessment happens when an estate makes a claim. Entitlement to claim the relief will depend on the company or companies Alan invests in qualifying for BPR at the time the claim is made. Tax relief will also depend on personal circumstances, and tax legislation could change in future.
While Alan is not expected to need to access this pot of money during his life, the investment will remain in his name, and so he will be able to request a withdrawal should he need to. John makes clear that withdrawals cannot be guaranteed, though, as the shares of unlisted companies can be harder to sell than shares listed on the main market of the London Stock Exchange. They may also be more volatile.
Peace of mind
Alan is comfortable with these risks, and decides to act on John’s recommendation. He invests the £1 million into a BPR-qualifying investment. Should Alan be unfortunate enough to pass away tomorrow, he knows that his daughters should inherit those shares without having to pay inheritance tax. As you can imagine, this is valuable peace of mind for Alan.
At Octopus, we work with a lot of advisers like John whose clients have sold a business in the last three years. So we’ve created a dedicated webpage for this client scenario. You’ll find a short video and more detailed information, including how the planning might look in practice, to help you take the next step with your own client. You’ll also be able to contact one of our experts should you have any questions.
We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London EC1N 2HT. Registered in England and Wales No.03942880. Issued: June 2020. CAM009829.
