Skip to main content

Inheritance Tax Service

Inheritance Tax Service


Special Offer

If you invest in the Seneca IHT Service before 31st January 2022, we will waive our initial fee and pay the dealing fees for purchasing shares. This means that all of your Subscription (after payment of any initial fee you ask us to pay to your financial adviser) will be used to buy shares that should qualify for 100% relief from Inheritance Tax after only two years.

Documents

Information Memorandum

Application Form for Individuals.

Joint Investor Application Form

Representative’s Application Form for Representatives (Power of Attorney)

Application Form for Trustees

Brochure: “A Growth Story”

Brochure: “An Income Story”

Our Terms and Conditions and those of our Custodian

Inheritance Tax

Inheritance Tax (IHT) is charged on the value of the items and money you leave to your beneficiaries when you die. Some of your assets are free from this tax (see below) but those that are not will be taxed at 40%.

Anything left to your spouse should be exempt from Inheritance Tax. For other beneficiaries, the first £325,000 of your assets are free from this tax: this is known as the ‘individual nil rate band’. In addition, there may be a further ‘residence nil rate band’ which can apply to the value of a family home in certain circumstances.

In addition to these ‘nil rate bands’, there are a number of ways to reduce your family’s exposure to IHT, such as insurance policies, gifts and trusts. These have varying degrees of cost and complexity and each take different lengths of time to become effective. However, these methods can involve the loss of control or access to your assets (potentially permanently).

Business Relief

Business Relief (formerly known as Business Property Relief) was introduced in 1976, as a way of encouraging investment into unquoted trading businesses and to prevent them being broken up in order to pay Inheritance Tax.

If you leave shares that qualify for Business Relief to your beneficiaries and have owned them for at least two years at the time of your death*, no Inheritance Tax should be due on the value of those shares.

There are a number of IHT mitigation solutions in the marketplace that look to use Business Relief as a way of getting money outside of someone’s estate. These often involve the purchase of shares in companies that are quoted on the Alternative Investment Market (‘AIM’) or private companies.

IHT Planning

IHT planning should involve simply more that avoiding IHT. Whilst a 40% tax saving is not to be overlooked, there is no reason why funds should not be working now and providing benefits during your lifetime. For example, leaving your capital intact but taking a regular income from it through retirement can help you and your family members to enjoy the benefits together. Whether it’s paying school fees, enjoying family holidays or even providing for long term care, the money you intend to leave for your beneficiaries can still be enjoyed, all under your control.

It is important to know what inherent risks are being taken with your capital in order to achieve a 40% IHT saving. It is also important to understand the volatility levels that you will see in any investment you make. Whilst you may accept some exposure to the volatility of AIM share prices, you may also prefer private company IHT solutions that invest in social housing backed by the security of bricks and mortar, infrastructure or leasing equipment to the NHS . A private company solution is generally less likely to suffer the day to day market volatility you might see with an AIM company solution.

What is the Seneca Inheritance Tax Service?

It is a discretionary service managed by Seneca Partners Ltd. The money you invest will be used to buy shares on your behalf in one or more private investee companies. These shares are expected to qualify for Business Relief, once you have held them for 2 years. Our Target Market document explains what sort of investor this Service may appeal to.

What are the aims of the Service?

  1. To invest your money in such a way that it should qualify for 100% relief from Inheritance Tax after only two years;
  2. To minimise the risk to the capital amount you invest*; and
  3. To generate a return of 4% p.a.* which can be paid to you as income, left to help your investment grow or a mixture of the two.

If I invest, how will my money be used?

The company (or companies) in which your money would be invested provide secured commercial loans to UK businesses. Each loan is secured against the borrowers’ assets which may include property, receivables, plant and machinery, stock and/or vehicles.

One such example is Social Housing. This has become a government cornerstone objective in recent times. Investment into our IHT Service helps fund our senior secured financing of residential housing stock which, working with our specialist FTSE counterparties over the last few years, neatly provides a socially responsible solution for the UK government in return for government funded rents paid into our IHT Service.

The demand for this type of housing stock is growing rapidly, especially in the regions of the UK where Seneca has its footprint. Your money is secured on physical assets backed by government rental. This goes a fair way to answering the safety of capital question which is an uppermost consideration for investors and also provides natural income or growth.

If you invest for growth, any profits made on the loans are retained in the business helping to increase the value of your investment. If you invest for income, any profits are used to pay quarterly dividends.

Is the Service linked to Stock Market performance?

No. The Service only invests in private limited companies, none of which are listed on any stock market. Each company’s share price is therefore based on its net asset value (“NAV”) and has no correlation with share price movements of quoted companies, such as those that make up the Alternative Investment Market (“AIM”).

Can I withdraw my investment if I need access to my money?

We understand that your circumstances might change. For example, you may need to access some or all of your money invested in the Service in order to pay for long term care.

As long as you have invested in the Service for at least 12 months, you can give 3 months’ notice to withdraw some or all of your money. A Withdrawal Fee may apply (see page 17 of the Information Memorandum for more details). As the shares you hold will be in one or more private companies that are not quoted on any Stock Market, any withdrawals are subject to sufficient liquidity being available in the Service or the companies in which you are invested.

How much can I invest?

The minimum initial investment is £25,000.

 

We recommend that you seek advice from your financial adviser before making an investment.

 


* Target returns are not guaranteed. Your capital is at risk and you may get back less than you invest.