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business relief
quarterly Industry Update
coronavirus developments budget news what the managers say market composition iht statistics what's ahead
FIND INSIDE
INTRODUCTION
1
MARKET UPDATE
2
industry analysis
4
considerations for investment
3
MANAGERS IN FOCUS
5
WHAT'S ON THE HORIZON
6
FURTHER LEARNING
7
The latest news, updates and statistics on BR
In partnership with:
1. Introduction
Foreword Opening statement Update overview Key findings
Foreword Opening Statement Update Overview Key Findings
1. INTRODUCTION
Coronavirus Developments Octopus Thought Leadership Budget News National Audit Office Seneca Thought Leadership What the Managers Say
2. market update
Market Composition Fees and Charges Performance
3. considerations for investment
Valuation Methodologies HMRC's IHT Statistics
4. industry analysis
TIME Investments Velocity BR Manager Videos BR Solutions Comparison
5. managers in focus
Coronavirus: What's Ahead Divergence from EU Rules What the Managers Say
6. what's on the horizon
Learning Objectives CPD and Feedback About Intelligent Partnership Disclaimer
7. further learning
2. MARKET UPDATE
4. CONSIDERATIONS FOR INVESTMENT
3. INDUSTRY ANALYSIS
5. MANAGERS IN FOCUS
6. WHAT'S ON THE HORIZON
7. FURTHER LEARNING
guy tolhurst
foreword
MENU
Foreword
INTRODUCTION / FOREWORD
T
his is our first Business Relief Quarterly Industry Update. Following in the footsteps of Venture Capital Trusts, Enterprise Investment Scheme and Alternative Investment Market, we’re switching to reporting on the ins and outs of the Business Relief market four times a year. There has been plenty to keep us busy, with the Coronavirus Covid-19 pandemic having a massive impact on our way of life as well as our economic and financial affairs. No one can say that it hasn’t overshadowed the election of a new government, the certainty of the UK finally leaving the EU, the continuing uncertainty of the negotiations for the final Brexit deal or the pre Budget speculation about inheritance tax (IHT) and Business Relief and the firming up of government policy with its first Budget. But in these extraordinary times, we’ll still take a look at what this all means for Business Relief. Business Relief is now a decidedly middle-aged 44 years old, but it has proved its value and continues to have a lot to offer. It has become a stalwart of family business protection and growth business funding. Fiona Graham, Director of External Affairs and Policy for the Institute for Family Business told us, “Business Relief has a clear objective and purpose – it facilitates the continuity of family business management and ownership between successive generations, allowing businesses to develop a long-term approach which focuses on stability and sustainability.” There may never have been a time when that was more important. This first edition gives you all the usual in-depth analysis of the figures, identifying the trends shaping the market, as well as expert commentary and insight on what’s happening right now. That includes the potential Coronavirus consequences and Budget impacts - direct and indirect. HMRC’s latest statistics show IHT receipts continuing to rise, with increases to the numbers of both net estates above the nil rate band and net estates above the nil rate band after exemptions, suggesting plenty of scope for future engagement with Business Relief. If you're new to Business Relief, you might be interested in the second edition of our Adviser’s Guide to Business Relief, designed to provide a reference document for the rules and practicalities that govern this market. I hope you enjoy reading this Update. I welcome any feedback and please do share this first edition with your fellow professionals.
managing director, intelligent partnership
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3. CONSIDERATIONS FOR INVESTMENT
4. INDUSTRY ANALYSIS
Jane Finnerty
opening statement
INTRODUCTION / OPENING STATEMENT
he world changed abruptly for us all when the true impact of the pandemic began to become clear. Many clients quickly began to see that their future financial security was being eroded by the effect of world changes upon the stock market and its consequential impact on their investments and their pensions. This was understandably unnerving to many of them especially if they were retired and their living standards were dependent on these carefully constructed financial plans. It's at this point that the role of a financial adviser becomes extremely important. Vulnerability is also a real concern at such a time. It is always said that vulnerability can occur through life events and the pandemic has really shown this to be true. A bereavement or ‘lockdown’ isolation, for example, both of which result in isolation and the physical loss of people looked to as part of a support network, can make the older client feel much more vulnerable. This combined with the worries many people have about their finances leaves many open to poor decision making, where they may, for example, prioritise short term planning over longer term plans. There is already evidence of this and people have taken money from their pensions using the pension freedom regulations because they either need the money now or the supposed security of having funds at hand. Without advice they may well proceed without consideration of all their options even though this may result in a poor outcome. However one of the more positive aspects of the pandemic is that families are reporting having more ‘ difficult’ conversations than usual around later life finances and end of life care topics which in the past have often been avoided. Another area of discussion which has come to the fore is around estate planning. Once the psychological barrier of talking about succession and inheritance is broken many positive conversations begin to take place. Minimising tax liability that would otherwise be due on an estate is important to those for whom IHT would erode the value of their estate to their loved ones. Along with this the pandemic has seen a change of emphasis by many people who might be in a position to step back a little but hadn’t considered it until lockdown forced them to stay at home. For some this has given rise to the recognition that a simpler lifestyle has a place in their future plans. Considered planning advice, including the various ways that Business Relief can be useful, can really make a difference here. In fact, the pandemic has clearly brought challenges to us all both personally and in professional terms. However it has also given financial advisers the opportunity to show the value of the service they can provide to both their older clients and to their families who are looking for a trusted source of advice and support in a rapidly changing financial and economic landscape.
- TISH HANIFAN
One of the more positive aspects of the pandemic is that families are reporting having more ‘difficult’ conversations than usual around later life finances and end of life care topics which in the past have often been avoided.
joint chair solla
tish hanifan
update overview
INTRODUCTION / UPDATE OVERVIEW
We couldn’t do this without the help and support of a number of third parties who have contributed to writing this update. Their contributions range from inputting into the scope, sharing data, giving us their insights on the market, providing copy, and peer reviewing drafts. So, a big thanks to: Tish Hanifan of SOLLA, Fiona Graham of the Institute of Family Business, Stephen Daniels, Henny Dovland and Simon Housden of TIME, Chris Hood of Seneca, Rupert Strachwitz of Velocity, and Jessica Franks of Octopus. Their input is invaluable, but needless to say any errors or omissions are down to us. We have relied upon MICAP for most of the data that we have based the update upon. MICAP is part of the same group of companies as Intelligent Partnership. We also carried out our own extensive desk research and interviews to verify their data. The update is made possible by our sponsors, who have contributed copy to the update and supported us by helping to meet production and printing costs. So, a big thanks to: Octopus, Seneca, TIME, and Velocity.
Business relief qualifying shares and share sales Business Relief allows investors who hold Business Relief qualifying shares to sell those shares. As long as they purchase replacement Business Relief qualifying shares within three years of the sale, the two year BR qualification clock is not reset. As the examples of Earthport, WYG and PTSG show, there are examples where it may be worth investors considering earning an immediate windfall, which can then be reinvested in other options a manager considers better long term value. However, investors should be aware of the risk that, should they pass away in between an investment being sold and any replacement shares being acquired within the three year window, they would not be able to claim Business Relief
acknowledgements and thanks
Find out more at MANAGERS IN FOCUS
Readers can claim up to 2 hours’ structured CPD (excluding breaks). By the end of the update readers will be able to: • Identify the main developments and news in the Business Relief market. • Understand how Business Relief sits within the current IHT landscape. • Be aware of the key fees and charges applied by Business Relief managers. • Recognise the various factors that will affect the Business Relief market in the coming months. • Understand the types of open Business Relief offers available on the market. • Be able to benchmark current products and providers against each other on key investment criteria
learning objectives for cpd accreditation
Find out more about claiming your CPD
INTRODUCTION / KEY FINDINGS
£6.2
Average investment in each individual company by AIM BR managers
million
since lockdown
new BR offers
1%
to investors in br offers
avg initial charge
x2
increase in rate of rise in IHT receipts
44
and br is still going strong
years young
1/3
BR is one of only a third of the 362 tax expenditures that have been costed
Business Relief
15x
RISKS FOR THE OVER 80s FROM CORONAVIRUS
OBR 2020 projection of government IHT take in 2024/25
billion
£7.1
key findings
from the previous year in first year of RNRB
more likely to die
2. Market update
coronavirus developments octopus thought leadership budget news National Audit Office: tax expenditures report seneca thought leadership what the managers say
coronavirus developments
MARKET UPDATE / section 1
As you can imagine, any news and update section on any investment area is currently likely to start with the pandemic.
hen the Office for Budget Responsibility released its latest Economic and Fiscal Outlook on Budget day, March 11, it admitted that its calculations didn’t take into account the most recent fiscal impacts of Covid-19. Despite that, it’s measured statement on the situation just a few weeks months now seems wildly optimistic: “With large numbers of people potentially sick – or restricting their movements to avoid becoming so – the coronavirus is likely to reduce both the demand for goods and services in the economy and the ability of businesses at home and abroad to supply them. That will temporarily reduce private sector incomes and spending (and hence tax revenues), while putting upward pressure on government spending to help address the outbreak. This implies additional upward pressure on the budget deficit and public debt. But the impact on the public finances over the medium and longer term is likely to be less significant, unless the outbreak inflicts lasting damage on the economy’s supply capacity.” The government’s subsequent unprecedented support packages for individuals and businesses underscore the severity of the rapidly developing circumstances created by the pandemic. It also suggests that the pandemic will cause "lasting damage" to the economy.
W
AIM market's Covid-19 sheer drop
Source: Hargreaves Lansdown 26 March 2020
- MARCUS STUTTARD
Since the start of the year the AIM All-Share Index has declined 10.5% per cent, compared to a 18.5% fall in the FTSE 100 and a 25.6% cent fall in the many smaller stocks in the wider FTSE All-Share Index.
AIM Business Relief Of course, AIM Business Relief investors might be expected to understand the volatile nature of AIM investing, but there have been major movements. From a post 2018 high of 972 at the end of Friday February 20, the FTSE AIM All-Share market fell over 10% by the end of the next week, and continued to fall. By 19 March the market had seen a 386 point drop, a dive of almost 40% in value. The main markets experienced similar levels of losses. The big value drops may be less traumatic for long-term investors like those invested in Business Relief-eligible AIM companies that need to be holding the asset at death to access the IHT tax relief. That incentive to not immediately join the contagion of investors selling off their shares must have some value at a time like this. Although, without being crass, the conditions have created a perfect storm threatening the lives of elderly people in particular, the biggest group of Business Relief investment holders, at a time of significant reductions in the value of their Business Relief investments. That said, by the third week of July, the FTSE AIM All share had regained more than 90% of the lost value of February and March. In fact, the AIM bounceback has been speedier than main markets: “Since the start of the year the AIM All-Share Index has declined 10.5% per cent, compared to a 18.5% fall in the FTSE 100 and a 25.6% cent fall in the many smaller stocks in the wider FTSE All-Share Index.” Joachim Klement, Liberum, 30 May. The crisis has also demonstrated the resilience of AIM, with AIM stocks faring relatively well during March’s market plunge. The FTSE AIM All-Share index’s loss of 20% was fractionally better than that suffered by the FTSE Small Cap benchmark. AIM shares aren’t all small caps these days, of course, so it’s worth noting the FTSE AIM All-Share index also beat the FTSE 250’s 21.7% fall. And Asset Allocator research shows the value of discretionary fund managers in AIM investing. “For Q1 2020 as a whole, the average discretionary AIM portfolio shed slightly less than the AIM index.”
This mirrors MICAP’s research: Figures from MICAP show that the majority of AIM Business Relief discretionary fund managers were able to outperform AIM, which suffered an overall 19% drop from the start of January 2018 to the end of the year (which included substantial drops in Q4). This compares with an average of -15% for the performance of the 21 portfolios tracked by MICAP in this area over the course of 2018.
aim 2020 fundraising
Source: London Stock Exchange
of the total raised on AIM in 2019
And figures released by the London Stock Exchange report that AIM quoted companies raised £709.25 million in April, £643.97 in May and £623.77 in June 2020, in further issues - that is, after the original IPO. That equates to almost 60% of the total raised on AIM in the whole of last year. Compare the fundraising in the last three months with the 2019 monthly average of £279 million (with a high of £499m in February 2019) and the monthly average for the first quarter of 2020 of £274.74 million, and we can see three things: • AIM quoted firms needed cash • AIM quoted firms were able to raise cash • Investors were still seeing the opportunities in AIM and investing in AIM quoted companies The liquidity levels have been very encouraging: Looking at the three months pre and post 1st March, volume traded on AIM is up 3% and value traded is up 8%. And one of the useful features of Business Relief is that, both AIM quoted and unquoted Business Relief managers can sell shares in portfolio companies and buy into replacement shares without the underlying portfolio investor mmediately losing their Business Relief qualification. In fact, we know that some AIM focused Business Relief managers have already sold out of positions in portfolio companies carrying significant debt on their balance sheets. Fundraising could be an important part of the support that is necessary and while AIM is a great place to be for accessing new capital, it is worth remembering that Business Relief managers may only make up a small portion of the shareholders of many of the AIM-quoted companies they invest in. Consequently, the help they can offer with fundraising may be limited. The good news for AIM investment managers is that the massive sell off has created opportunities for those who know where to look. That is, for companies with either net cash or manageable levels of debt and good, consistent revenue over time, with the potential to generate good returns for investors. These are the types of companies that usually trade at a high premium, but paniced shareholders have left some at attractive prices. However, dividends have taken a hit that may take longer to reverse.
aim trading volume
+8%
dividends on aim
£709.25 million
APRIL
MAY
£643.97 million
JUNE
£632.77 million
Between mid-March and late May, 67 AIM-quoted companies suspended their dividend, 41 cancelled the payment and eight cut it in size. In early June, more announced changes to their dividend policy to preserve cash. By 11 August, according to Yahoo Finance UK, 139 AIM companies had cancelled, cut or suspended payouts in 2020. Banks and insurance firms in the UK have also cancelled payouts following requests from the Bank of England. While institutional investors understand the need to retain capital in the face of very difficult economic conditions, retail investors may not. The bounceback so far and optimism about the production of a vaccine in the UK in the very near future after global collaboration has created positivity in global equity markets. But, (in the event of a second wave in the UK and if a vaccine doesn’t provide a quick return to normal, some have said that “Equity markets aren’t pricing in much room for disappointment.” (Ben Kumar, senior investment strategist at 7IM) That said, AIM managers are used to volatility and plan for it.
almost 60%
pre covid-19
280
early june
180
850
total issuers quoted on aim
paid a dividend?
Wider Business Relief Coronavirus impacts While increased liquidity on AIM has resulted from an uptick in share trading as investors concerns peak, there is a question mark over whether the ability of both AIM and non-AIM Business Relief managers to provide timely liquidity to their investors been affected by a run of concerned clients seeking to withdraw their capital. Another important consideration could be the potential for withdrawal of funds to be required due to successful deaths. This could also put the manager in the position of needing to sell at a time when they would probably rather not. Of course, the cash position of the manager’s overall Business Relief portfolio will be telling here. Our anecdotal evidence indicates that levels of withdrawals have not generally presented significant issues to Business Relief managers. This suggests that advisers understand the longer term play that Business Relief investment represents. We do have reports from some managers that inflows have slowed, but MICAP data confirms that these are very much in the minority. In fact, three quarters show the continuation of funds invested into their Business Relief services, some with very strong inflows, from the start of the year to May, June and July. Perhaps a new focus on our own mortality has prompted advisers and investors to actually take greater estate planning action? If so, Business Relief may well have been a beneficiary of this. That doesn’t mean underlying investee companies are flush with cash. They may require unplanned and significant additional funding to continue their business journey. While non AIM Business Relief managers are quite likely to be very involved in new fundraises, providing the benefit of their expertise in this area to their investees, at times like these fundraisings often come at substantial discounts to the current price. It is also worth remembering that Business Relief portfolio companies that raise extra funding at the moment may cause the holdings of existing investors who don’t take part, to be heavily diluted. Another point to note, is that over a quarter of the open Business Relief offers at the end of June 2020 included an income option, with almost 60% of those income options available through AIM offers. Given the interruption in trading experienced by many sectors during the Covid-19 lockdown, income payments may well have dropped for Business Relief investors who have selected this option from those Business Relief services that offer it.
Trades with a measure of insulation Among companies that will have the best chance of survival are those that are able to pivot their activities quickly, arguably an easier task for the smaller unlisted companies that tend to be the beneficiaries of Business Relief targeted investments. Those companies may also turn to their investor base for additional funding at a time when their investment runway may be shortened by drops in income streams. Some trades may benefit from an amount of natural insulation from some of the issues created by the coronavirus lockdown and they include sectors that have been popular for Business Relief investment: Those in the online media and entertainment sector may find their services in high demand as people who have been stuck at home with little to do look for new online content and games. Renewable energy generation has become a strong sector for Business Relief managers. While global energy consumption has dropped during the pandemic with shut downs causing business use to plummet, research shows that fossil fuel generation is falling far more than renewable power: Forbes has reported that, according to an analysis by the Wärtsilä Energy Transition Lab, coal-based power generation has fallen by over a quarter (25.5%) across the European Union and United Kingdom in the first three months of 2020 compared to 2019. Meanwhile the share of renewable energy in the EU and UK has risen to 43%. Not only is this great news for the environment, but it is a major boost for a sector that forms a part of many Business Relief portfolios. It has also been called an important development that will be invaluable to accelerate the energy transition to renewables. On the AIM market, the companies in the Tech, Life Sciences, and Food Producing and distribution sectors have also found recent conditions to their benefit. The figures show that, between 1 March and 25 June 2020, Healthcare was the best performing sector up 55.1% and real estate was the worst performing, down 14.3%.
- Joachim Klement, Liberum, 30 May
jessica franks
thought leadership
Use BR to unlock more estate planning conversations
MARKET UPDATE / THOUGHT LEADERSHIP
Use BR to unlock more estate planning conversations What can you do if a client has a substantial inheritance tax liability, but they’re reluctant to engage in a purposeful conversation about their estate planning? While it won’t be the right solution for every client, a BR-qualifying investment can be a good option for a client who is reluctant to do anything irreversible, and who is happy to take more invest ment risk with their wealth in return for the benefit of the tax relief. Clients have grown more mindful about retaining control of assets In a survey commissioned by Octopus in December 2019, 89% of advisers said that, compared to five years ago, their clients have become more mindful of retaining control of their assets1. This can make some clients reticent about estate planning, which they may associate with giving away capital, medical questions from insurance firms and other uninviting prospects. Such clients may say things like “The kids will get enough”, or “I’m happy to pay the tax”. In reality, they may actually welcome a way to reduce the inheritance bill their beneficiaries face, but their perception of what estate planning entails stops them taking action. Talking to a client about BR can be a good way to show the broad range of estate planning options available. Many clients have never heard of BR until their adviser mentions it to them. And by talking about BR, you bring the conversation back to investments, familiar ground for many clients. Compared with some estate planning solutions, BR is relatively easy for clients to understand. There are no complex legal structures, and no requirement for underwriting or medical questionnaires that you might find elsewhere. BR could also be an option for a client with a large ISA portfolio they want to pass on. More assets under advice In the same Octopus survey, 76% of advisers said that estate planning has led to them advising on assets they didn’t previously. Because BR can help unlock more estate planning conversations, it should be an integral part of every adviser’s estate planning toolkit. What are the risks? BR acts as an incentive for investors to take investment risk with their money, in exchange for inheritance tax relief. The value of a BR-qualifying investment, and any income from it, can fall as well as rise, and investors may not get back the full amount they invest. Tax rules could change in the future, and tax treatment depends on an individual’s personal circumstances. BR is assessed by HMRC on death. Qualification cannot be guaranteed because tax relief depends on portfolio companies maintaining their qualifying status. The shares of smaller and unquoted companies could be more volatile than shares listed on the main market of the London Stock Exchange. They may also be harder to sell. Where to learn To learn more about BR-qualifying investments, and to access resources you can use as part of your estate planning conversations with clients, go to octopusinvestments.com/our-products/inheritance-tax-investments/
By talking about BR, you bring the conversation back to investments, familiar ground for many clients.
head of tax octopus investments
octopusinvestments.com octopusinvestments.com/contact/find-your-local-contact/ support@octopusinvestments.com
contact
BR-qualifying investments are not suitable for everyone. Any recommendation should be based on a holistic review of your client's financial situation, objectives and needs. We do not offer investment or tax advice. Personal opinions may change and should not be seen as advice or a recommendation. 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: July 2020. CAM009717.
1 Unlocking Estate Planning: How Business Property Relief is opening doors for advisers, published by Octopus Investments, February 2020
budget news
MARKET UPDATE / BUDGET UPDATE
The chancellor’s July ‘mini Budget’ announced measures to stimulate the UK economy with help for businesses to retain and create jobs, for the housing market and for hospitality and tourism. No changes to taxes were announced as a measure to fund recovery from the damage caused in the wake of Covid-19. Instead, Mr Sunak sought to fuel recovery with incentives including VAT cuts and discounts on eating out, as well as increasing the stamp duty threshold applicable to property purchases to £500,000. This last measure could prove a useful stimulus that will positively impact the multiple investment managers in the Business Relief arena that have property lending and development in their portfolios as a means to pay for some of the economic havoc caused by the virus. In response to calls for a wealth tax, or increasing Inheritance Tax (IHT), Prime Minister Boris Johnson said, “We need jobs, jobs jobs not tax, tax, tax.” So, IHT and Business Relief are untouched despite calls to push up IHT as one means to pay for. The impact of Covid-19
- boris johnson, prime minister
We need jobs, jobs, jobs not tax, tax, tax.
july 2020
Before the March 2020 Budget, even though there was huge press speculation about the potential abolition of IHT and its attendant reliefs, such as Business Relief. The discussion included a report from the All Party Parliamentary Group (APPG) on Inheritance and Intergenerational Fairness. It suggested radical changes to the IHT system, including the abolition of Business Relief for simplification purposes. But, at a time when the strength of UK businesses is of major concern to the government, the report did not produce any research or statistics that look at how these changes might impact small and family businesses. Fiona Graham, Director of External Affairs and Policy for the Institute for Family Business told us: What’s more, it is generally agreed that any abolition of Business Relief could also have unintended consequences for the AIM market. A sizeable portion of AIM shares is held by investment managers specifically because of their eligibility for Business Relief. Paul Jourdan, co-manager of the TB Amati UK Smaller Companies fund told Money Observer, “If the IHT exemption was removed it would put pressure on AIM, certainly over the short term. It would be a recipe for mayhem if it was not done in an orderly way and instead everyone had to sell out all at once". Instead of announcing any direct changes for the tax-advantaged or estate planning spaces, brand new chancellor Rishi Sunak directed his influence elsewhere. But, that doesn’t mean the chancellor said nothing of interest to those in the Business Relief space.
march 2020
“Business Relief is a crucial relief from inheritance tax for family businesses. Ultimately, without Business Relief, the death of a major shareholder could lead to the end of an otherwise profitable business.”
- Fiona graham, institute for family business
Stamp duty threshold
£500,000
Support for sustainable energy - a Business Relief stalwart There were the new commitments to environmental issues. Sunak’s Budget noted that, “Increasing the UK’s use of clean energy is a vital part of reducing carbon emissions and putting the nation at the forefront of new innovative industries.” So, could some of the Budget items drive the type of green investments available and already eligible for Business Relief? Both the Green Gas Levy, providing more support for biomethane production to increase the proportion of green gas in the grid, and the extension of the Renewable Heat Incentive (RHI) aimed at providing investment certainty for the larger and more cost-effective renewable heat projects, could be significant.
Backing growth mechanisms What’s more, the government specifically reiterated its support of mechanisms through which growth can be generated through long-term funding, including areas such as SME finance, venture and growth capital. On this basis, as one of the world’s leading growth markets, AIM looks set for continuing political backing. And given the impacts of Coronavirus on the UK economy, the incentive of Business Relief to invest in UK businesses, including many of those quoted on AIM, any possibility of removing Business Relief for AIM companies now seems remote. Cuts in entrepreneur’s relief could impact Business Relief qualifying business owners The cut in entrepreneur’s relief lifetime limit from £10 million to £1 million will give business owners less headroom when selling or liquidating their business in terms of capital gains tax. Depending on investors’ circumstances and the type of Business Relief investment, entrepreneurs relief can be accessed at the same time, although not all Business Relief structures attract entrepreneurs relief. Entrepreneurs relief enables company founders selling their businesses to pay capital gains tax (CGT) at a rate of 10% as opposed to the typical 20% that usually applies to gains. Interestingly though, the lifetime limit for investors’ relief was left untouched at £10 million. Investors’ relief, which can also apply to Business Relief qualifying companies, facilitates the same reduction in CGT for external investors in unlisted trading companies. Tax planning pressures The announcement of further resources being made available to HMRC to tackle tax avoidance, evasion and other forms of non-compliance looks to be another blow to the abusive tax avoidance schemes and those who promote them that have been targeted for the last few years. The government-backed status of Business Relief is likely to provide even more comfort to those searching for legitimate tax planning methods.
Pensions taper changes The government had already suspended the tapered annual pensions allowance for doctors for the 2019/20 tax year before the Budget, after it became clear they were limiting their much-needed overtime to avoid having to pay tax penalties on their earnings that breached the limit. Chancellor Sunak raised the 2020/21 threshold to £200,000 (previously £110,000) before the taper threshold kicks in. If adjusted income equates to more than £240,000 (previously £150,000) the annual allowance is reduced by £1 for every £2 earned in excess of £240,000. The taper had left high earning individuals with excess cash over and above their annual pension limits, some of which may well have been invested into Business Relief as an alternative IHT mitigation strategy (pension funds are typically free of IHT). Nevertheless, even higher earners, saw the minimum tapered annual allowance reduced to £4,000 (previously this was set at £10,000) at an “adjusted income” level of £312,000 and above. Later life care costs Business Relief has been cited as a partial solution to care cost issues. It allows investors to continue to grow their wealth, while achieving IHT exemption and retaining quick access to their funds in the event of unforeseen health concerns. The March Budget saw little in the way of solutions to the major social care issues putting upward pressure on later life costs and how individuals can accommodate them.
New Annual pensions allowance
national audit office management of tax expenditures report
MARKET UPDATE / national audit office
This February 2020 report, “examines the effectiveness of HM Treasury’s and HMRC’s use of their resources in the management of tax expenditures.”
t is critical of the processes in place and the lack of ongoing oversight of the 362 tax expenditures used by government to pursue economic and social objectives. At a forecast cost of £155 billion in 2018-19, this is a significant issue. While HMRC and HM Treasury are working to address value-for-money concerns and enable greater transparency, the NAO notes that, “it will take time to identify and embed good practices” and that, “Both departments need to make substantial progress and ensure sufficient coverage and rigour in the work they undertake on this matter. The scale of the problem is substantial - with only 111 of the 362 tax expenditures having been costed by HM Revenue & Customs. The good news for Business Relief is that it has been costed in recent years, although the NAO states that, “The evaluation considered
I
only 111 of the 362 tax expenditures have been costed by HM Revenue & Customs.
issues such as awareness among target groups but did not conclude on the impact of the tax expenditures.” This is somewhat arguable as, although HM Treasury’s November 2017 consultation response, ‘Financing growth in innovative firms’, did not specifically consider Business Relief’s impact on behaviour or present quantitative evidence for a value-for-money assessment, it did find that, “BPR plays a valuable role in preventing the breakup of otherwise viable businesses purely in order to meet IHT liabilities. BPR was also extended in the 1990s to all levels of shareholdings and shares quoted on growth markets. These extensions have supported investment in growth markets such as the Alternative Investment Market.” That doesn’t mean Business Relief can rest on its laurels. The report has put a renewed focus on the importance of monitoring the expenditure of tax reliefs that 'support government economic and social objectives' to ensure they continue to earn their keep. And of course the pressure to find savings now imposed by weakened economic conditions brought about by the global pandemic, will also weigh on all tax reliefs.
chris hood
OBTAINING NATURAL INCOME YOU CAN LIVE WITH WHILST ALSO PROVIDING FOR YOUR DEPENDANTS
M
any law firms have reported a surge in demand for wills and lasting powers of attorney since the start of the Covid-19 pandemic, suggesting that vast swathes of the population have used lockdown to get their houses in order. In all probability, regard for one‘s own mortality has similarly prompted a great number to look at their IHT arrangements. So what are the drivers for clients when assessing the vast array of IHT solutions in the market? In the past it may well have been as simple as earmarking an amount of money that could be passed on to beneficiaries and selecting the product that most appealed at the time, many of which have likely performed pretty much as expected. That is until now. The economic outlook globally is massively uncertain and for the UK not only are we dealing with stratospheric levels of support to keep the lights on and an eternity of managing public finances but also the unresolved spectre of Brexit. Corporate Britain is in turmoil with results season still to come. It is unlikely to be heart- warming. Whilst markets have generally held up better than expected so far, many astute judges remain sceptical as to whether it will last. Fundamentally, we are all dealing with a different and much riskier proposition to the one we thought we knew pre -Covid. Investment switches are common- place as clients work with their IFA’s to re position themselves and it is possible to adopt a similar approach with IHT planning. If exposure to AIM volatility is causing the nerves to jangle what do the private company IHT solutions have to offer by comparison? Infrastructure, leasing equipment to the NHS are popular, more defensive options. For the Seneca IHT Service, we are using our strengths in bricks and mortar. Social Housing has become a government cornerstone objective in recent months, more so as a defence against the urban spread of Coronavirus. Our senior secured lending for residential housing stock, working with our specialist FTSE counterparties over the last few years neatly provides a socially responsible solution for UK government in return for government funded rents 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 and with government funding seemingly knowing no bounds then opportunity and deployment of our investors’ funds go hand in hand. So, having your money secured on physical assets backed by government rental goes a fair way to answering the safety of capital question which is an uppermost consideration for investors. The nature of this activity also allows us to reconcile tangible asset security with paying natural income distributions each quarter. Investors have the option of a 4% pa growth target or have it distributed as income each quarter. With capital intact and potentially protected against IHT after 2 years, a 4% yield from a fully secured investment combined with the IHT mitigation is eye catching.
If exposure to AIM volatility is causing the nerves to jangle what do the private company IHT solutions have to offer by comparison?
sales director seneca partners
senecapartners.co.uk 01942 295 988 chris.hood@senecapartners.co.uk
what the managers say
MARKET UPDATE / WHAT THE MANAGERS SAY
So how are the managers feeling about the Business Relief market and overall investment market conditions? Here's what they have to say.
What are the big opportunities you’ve been seeing in the market in the past year?
Sales Director, Seneca Partners
01
During the last 6 months in particular, IHT investors have been much more inclined to consider the safety of the underlying assets in their IHT portfolios. AIM volatility has certainly affected that. Many investors have taken flight to strategies which have physical security in support of their investments.
How do you feel about the political landscape and Brexit?
Brexit and more recently C-19 have dramatically changed the investment landscape for everyone. Brexit has almost become secondary to C-19 and the government’s financial response measures. Unparalleled levels of public spending might feel positive in the moment but there will be consequences at some point down the line.
02
What has been a big highlight for you over the past year?
De-risking our lending activity by changing the composition of our IHT loan book significantly into senior secured lending against Social Housing stock backed by government rents has been very well timed. Having bricks and mortar as security with dependable natural income is of great comfort to IHT investors.
03
stephen daniels
Head of Investments, TIME Investments
During the year we completed over £175 million of renewable energy acquisitions, including a substantial number of operational solar farms. Our renewable energy holdings are now well balanced between the established technologies of wind and solar. In addition, we completed our first acquisitions in the commercial forestry market for over five years.
Following the Conservative victory in the December 2019 General Election the political landscape is now clear for the first time since the Brexit Referendum. Whilst Brexit has largely been forgotten due to the COVID-19 outbreak it does present further risks to the UK economy and is likely to cause further volatility in the value of Sterling. Our IHT assets are all located in the UK and are therefore insulated from changes in foreign currency exchange rates. The risks of a higher tax environment for both individuals and corporates has sadly not been removed, due to the high level of Government borrowings which have been required to finance the COVID-19 emergency measures.
We have continued to seek high quality renewable energy sites which benefit from generous inflation linked subsidies. The impending Brexit date was the catalyst for a number of overseas holders of such assets to realise their holdings in the UK, from which we were able to secure over £80 million of operational solar farms over the last year.
managers:
Chris hood
seneca partners
time investments
Rupert Strachwitz
velocity credit ventures
rupert strachwitz
CEO, Velocity Credit Ventures
The expansion of the Velocity (S)EIS funds has had three significant consequences: (i) we have been able to invest in a larger number of exciting young businesses; (ii) our portfolio companies now employ in excess of 250 people; and (iii) we continue to see the progress of the UK as a burgeoning centre of innovation for national and international consumption. With the excellent track record we have developed over the last 4 years, we are even more so delighted to have launched our ground-breaking new IHT service.
Quite correctly the political focus is solely on defeating the COVID-19 threat. Once it has been brought under control, the core work of all political parties will be to repair the severe economic damage to our country. This goes hand in hand with finalising the trading relationship with the European Union. We are hopeful that one of the lasting positive effects of the COVID-19 tragedy will be a political class which is less confrontational with the EU (and vice versa).
The increasing use by SMEs of non-bank sources of finance mirrors the continuing reluctance of mainstream banks to properly service the needs of small and medium sized businesses in the UK. This is particularly prevalent in all areas of trade finance, both domestic as well as international trade. The opportunity to serve SMEs is only strengthened.
How has coronavirus impacted your business?
Our processes are very strong and have served us well and so we are in good shape at the present time. But like most other businesses, lockdown and a new way of working has allowed us to re calibrate in some areas of our operation and really focus on our strengths. At business and product level we are happy with where we are. However, at investor level, it would be entirely expected to see significant caution not least because of the vast uncertainty in the economy particularly with regard to employment and future earnings. Referring to IHT planning in isolation, asset backed options would appear to be a good play where capital should be better protected to a large degree. That’s why we have pivoted our trading activity into senior lending against fully secured bricks and mortar with government backed rentals. This also creates natural income which we are able to distribute each quarter and being able to supplement investors’ other income from capital which benefits from Business relief is a compelling argument.
04
In light of the Government guidelines in March 2020 that employees should work from home where possible, TIME put measures in place to allow our entire business to do so. We are focused on three things, the health and wellbeing of both our clients and our staff, our ability to continue to support advisers and clients and, of course, the strength and robustness of our investment propositions. As this situation evolved, we put in place plans and procedures to address every aspect that impacts our stakeholders and critical business functions to ensure the uninterrupted continuity of our business, whilst not compromising any of our risk management, security measures and regulatory responsibilities. We are pleased to have seen continued healthy inflows into our BR services, albeit at slightly reduced levels to those we would typically expect at this time of year. The assets held by our IHT service, TIME:Advance, are well protected against the effects of COVID-19, due in part to the fact these trades are privately owned, long term, cash flow driven and asset-backed. We have continued weekly dealing and our share price has remained in line with expectations and our target return.
We have been fortunate that our business has proven to be resilient so far. Our Business Continuity plan allows all our workforce to work remotely. We have an excellent client digital portal which allows for on-line applications and eases client reporting. Whilst we have felt the impact of recent market volatility, our fundraising has continued to increase year on year. Many of our investee companies have benefited from the increased demand for digital services driven by our response to this dreadful disease.
octopus investments
Heead of Tax, Octopus Investments
Business Relief encourages investors with patient capital to fund qualifying businesses. We’ve actually seen slightly lower outflows since the pandemic started, which is a good indicator that the relief does encourage supportive investment through market cycles. As we move into the recovery phase, directing long-term investment into smaller and unquoted businesses will be even more important. These are businesses that provide jobs and fuel economic growth. The relief is an important aspect of providing businesses with the capital they need to come through the current situation.
As a fund manager, it’s been business as usual for Octopus. We transitioned seamlessly to working from home, and did not furlough any staff. We’ve been reassured by the resilience of our AIM portfolios. The Octopus Inheritance Tax Service meantime has so far done what it has been designed to do, which is perform relatively consistently over different market cycles, with our deferred and contingent annual management charge acting as a buffer for investors as well. The underlying businesses we manage on behalf of investors in the Service are all part of the nation’s critical infrastructure, and so kept operating throughout the lockdown. Obviously we maintain a cautious approach, but that’s because it’s what we always do whatever the economic situation.
The UK has long-established and highly successful systems of tax reliefs designed to support growing businesses. Those systems have made the UK a great place to be an entrepreneur, and we expect them to become even more important after Brexit and as part of the economic recovery from Covid.
It’s been yet another year where we’ve continued to see increased interest from investors in understanding their estate planning options. It’s a big and growing advice opportunity. Some conversations are client-led, but we know a lot of clients rely on their adviser making the first move, even at times like this.
chris wood
RUPERT STRACHWITZ
velocity
3. Considerations for Investment
market composition fees and charges performance
market composition
CONSIDERATIONS FOR INVESTMENT / MARKET COMPOSITION
here were no new Business Relief offers during the first quarter of 2020. This is understandable given the arrival of strict measures in the UK to counteract the spread of the Coronavirus Covid-19 pandemic, which saw the concerns about the disease rising from February and the country go into ‘lockdown’ during March. However, it is worth noting that even in the first three months of 2019, there were no brand new Business Relief offers introduced to the market, with Business Relief being a generally stable market that does not see surges in new offers, as the vast majority of offers are evergreen, meaning they are always open for investment. Open offers As the new decade began, there were 56 open offers in the marketplace, four less than when we last looked at this market in March 2019, when we published the last of our annual Business Relief Industry Reports. Part of this may be down to the fact that 2019 was riven with uncertainty when it comes to inheritance tax, amid suggestions that a potential Labour government would look to abolish the tax, while then-Chancellor Sajid Javid had hinted before the December General Election that he would consider reforming or replacing it. While this did not happen, the arrival on these shores of the Coronavirus pandemic soon after the Budget may have deterred any managers considering launching a new Business Relief offer, for the time being at least. Interestingly though, by 1 July, there were 62 open BR offers, despite the upcoming mini-budget and the fears of a second wave. This takes the number of open offers back up to the number open in 2018. Perhaps the calls for a significant increase in IHT, as well as the encouraging bounceback by the AIM market from the sharp drops in value in February and March have been a driver for BR managers?
In this section, we analyse the state of the Business Relief market based on the number of offers in the market. Unless otherwise stated, this analysis uses data obtained from the MICAP platform and is correct as of 1 July 2020. Where helpful, reference is also made to analysis undertaken as at 30 March 2020.
AIM vs Non-AIM The confidence of BR managers seems to have extended beyond the outperforming AIM market: Of the 56 open offers at the end of March 2020, 29 provided access to the AIM market, while 27 did not. By the start of July, two more AIM BR offers had opened and four new private company BR offers were available.
open offers: aim vs non aim
average number of investee companies per aim br portfolio
27
aim
29
31
All data is correct as of 1 July 2020, and has been obtained from the MICAP platform, unless otherwise stated. That said, there are comments where appropriate on changes to those figures at the date of an earlier review on 30 March 2020. MICAP offers IFAs and other financial professionals a platform to conduct due diligence on tax advantaged funds, of which there were 62 focused on Business Relief at the time of writing.
How do we use MICAP?
non-aim
Investment Strategy Given the recent uncertainty and the restrictions lockdown placed on income streams to some investee companies, it’s perhaps no surprise that no Business Relief offers have opened since March 2020 with income as part of their investment strategy. But, since all of the six Business Relief offers to open since the substantial market crashes in the first quarter focus on growth or capital preservation and growth, there is manager confidence in recovery and beyond for Business Relief investees. This may also hint at the potential for growth from the acquisition of shares whose true intrinsic value is now lower than their actual price after panic selling.
Open offers by investment strategy
Diversification Providing accurate data on the levels of diversification within Business Relief portfolios can be difficult, because many offers will use a single underlying company controlled by the manager which will invest in a wide range of Business Relief-qualifying companies on behalf of the investor. As a result, using the average number of investee companies can provide a misleading figure that is considerably different to the true picture. As a result, MICAP’s figures for non-AIM investments suggest that an average of 1.3 firms are invested into through Business Relief offers. However, a more accurate picture is offered by the average number for AIM-focused Business Relief offers, where the figure is 27 companies. This latter figure is the same as in our March 2020 and March 2018 analyses. AIM-focused Business Relief offers generally have a higher number of investee companies because shares quoted on an exchange are easier to invest and divest, compared to unlisted shares. Looking across the Business Relief spectrum, it may be better to use the different sectors that are invested into as a guide to diversity. This is because, for example, a portfolio that is invested into 10 wind farms across the country may appear ‘diversified’ in terms of having 10 separate operations, where a fault with one may not impact the others. But a change in government policy could adversely affect all 10 investments, whereas being invested in wind, solar power, and care homes may be considered to offer greater diversity. Taking a sample of open offers, there is a wide range of sectors into which funds invest, from renewable energy and energy efficiency companies, to secured lending, self-storage and forestry.
open offers
62
30 March 2020
1 July 2020
fees and charges
CONSIDERATIONS FOR INVESTMENT / FEES AND CHARGES
he average initial charge to investors has reduced further since March 2019’s 1.09%, reaching 1.02% at the end of March 2020 and dropping to 1.00% by July 2020. This downward trajectory will be welcomed by investors, but this must be balanced by an awareness of the amount being charged to the investee companies. The average doubled from March 2019 to March 2020, increasing from 0.14% to 0.28%, and pushing up to 0.35% by July suggesting that managers are transferring costs to the investee companies instead of investors. While charges to the investor will reduce the amount on which they receive tax relief, charges to the investee company will inevitably put more pressure on that company to raise sufficient funds. It is also worth noting that, although the average initial charge to investee companies is just 0.35%, where these charges are applied they can be relatively high - currently reaching a maximum of 7%, which will take a hefty chunk out of the investment that the company is receiving.
initial charges: open offers
Data provided by MICAP
Read our EIS and VCT updates and BR Report for an analysis of typical fees (including non-AIM funds) of each individual product:
more on typical fees
EIS Q1 2020
VCT Q1 2020
deep dive into fees and charges
Annual Management Charge The Annual Management Charge (AMC) charged to investors has shown little movement since 2019. However, in March this year, the maximum total AMC had come down slightly, at 2% down from 2.25% in 2019, following on from a bigger drop from 3.5% in 2018. Although this looked like a clear and conscious effort to bear down on the AMC, it seems commercial pressures may be edging it up again with July 2020’s total maximum at 2.5%. As with initial charges, it appears that the additional amount is being loaded on investees as, in March 2020 the average AMC charged to investee companies was 0.31%, but in July it was up to 0.36%, taking the average total AMC up to 1.27%. While this is still below the 2017 high of 1.42%, the upswing driven by Business Relief offers opened since the initial impact of the pandemic suggests that managers may foresee greater work involved in picking and supporting Business Relief investees that can weather the uncertainties of the ups and downs of a Covid-19 world. Not to mention Brexit, the outcome of which is still largely unknown. Interestingly, the average total AMC of AIM Business Relief offers has risen from 1.06% in March to 1.28% in July, perhaps as an indicator of the difficult conditions on public markets when investor contagion threatens.
Annual Management Charge
Performance Fee Only one of the open offers includes an exit performance fee. However, five still have an annual performance fee. While the majority do not charge this, it is important to note the ones that do and to be aware of what that means for an investor’s money. Looking at a manager’s past performance may help make a judgement on whether the performance fee is achievable, while the overall benefits of the investment will need to be considered when deciding whether an annual performance fee - which can be as much as 30% once a pre-set threshold is reached - is an acceptable charge. Of the five that do charge an annual performance fee, four do not set it any higher than 5%, so that of every pound invested, investors will be charged a fee when those investments return £1.05 or more. As the table shows, the one provider charging a 30% annual performance fee might seek to justify this charge - which is substantially higher than the rest - by pointing out that this is only charged when investments hit a performance threshold of 10%.
performance fee
annual performance fee
20%
annual performance hurdle
15%
30%
4%
5%
10%
4.5%
br offer 1
br offer 2
br offer 3
br offer 4
br offer 5
performance
considerations for investment / performance
This section focuses on non-AIM Business Relief offers, where performance data can be more reliably mapped and cross-referenced with each other.
target return
Assets Under Management The statistics show the wide range of Business Relief services in terms of AUM. If we take the average AUM and the average number of companies that AIM-focused Business Relief managers invest into (27), this suggests £6.2 million is the average investment in each individual company. Furthermore, figures from MICAP show that 61% of investments by AIM Business Relief offers are currently made into companies with a market capitalisation of over £250 million, based on 24 of the 31 AIM Business Relief offers to have supplied this data. This suggests that most AIM Business Relief investments are into companies that are far larger than might be expected for unlisted companies and suggests that many investments will only be small proportions of a company’s overall value. This potentially shows how AIM allows investment into much larger and/or more established companies, while still playing an important role in getting cash into companies that might otherwise go under the radar of mainstream investments. Of course, non-AIM Business Relief managers are likely to have much more control of the companies they invest in, often including a seat on the board, allowing them to bring to bear their expert influence on running the companies.
*Data from 17 of the 28 non-AIM offers for which there was data at 30 March 2020 **Data from 22 of the 31 non-AIM offers for which there was data at July 2020
Target Return The average target return had risen over the past few years, indicating a growing level of confidence among Business Relief managers. The rise may also have been influenced by the changes in the EIS and VCT world, where the risk to capital requirement means every pound invested must be at risk. It may be that there are deals that would otherwise have gone into EIS capital preservation strategies that are now more suitable for Business Relief, bringing with them the benefit of higher returns potential. That said, it appears that the non-AIM offers that have opened since the start of the year, are setting their sights a little lower, dragging down the current average target return. The economic damage wrought by Covid-19 is, of course, likely to be playing more than a substantial part in this development.
annualised return since inception
Annualised Return Although the data comparisons are not entirely like-for-like, the analysis suggests that the average annualised return since inception fell between the end of the first and second quarters. Given the scale of the lockdown, major interruptions to income streams for businesses across the board for a large part of that period and some of the severe consequences we’ve seen in the wider economic landscape, the impact on annualised return since inception appears to be relatively limited. While the figures may initially suggest that the offers are on average failing to meet their target returns, the target figure may be skewed somewhat by the more recent entrants into the market, which may not have started producing returns yet. Bearing in mind that Business Relief products are generally focused on wealth preservation rather than growth, it is promising to see that all of the stated returns have managed to remain in the positive even as a minimum. Meanwhile, in March, six of the 28 offers had annualised returns of over 4% since inception, increasing to nine of the 31 offers in July, suggesting there are opportunities for strong growth in these investments.
assets under management
average
£167,838,037
minimum
£689,195
mode
£573,300,000
medium
£55,000,000
maximum
£1,227,253,000
The underlying businesses we manage on behalf of investors in the Octopus Inheritance Tax Service are all part of the nation’s critical infrastructure, and so kept operating throughout the lockdown.
- jessica franks, head of tAX, octopus investments
4. Industry analysis
valuation methodologies HMRC’s IHT Statistics
valuation methodologies
INDUSTRY ANALYSIS / valuation methodologies
The fall from grace of former investment manager superstar, Neil Woodford and his Woodford Equity Income fund (now renamed LF Equity Income) raised questions around the liquidity of unquoted stocks in open ended funds largely because of concerns about how overweight the fund was with these illiquid assets.
B
usiness Relief offers are discretionary portfolio services and while the structure of the relief allows for access to invested funds without the immediate loss of eligibility for it, Business Relief managers do not guarantee liquidity timelines. That said, many can point to a good track record of fulfilling withdrawal requests well within target timelines. What is more pertinent for Business Relief in the Woodford story is the valuation of unquoted shares; adjustments to the valuation of the unquoted assets of the fund's portfolio before it was wound up have raised questions about valuation methodologies where no public market is driving pricing. By the time of the final valuation of the LF Equity Income fund in January 2020, fund administrator Link Fund Solutions’ fair value pricing committee had already marked down the value of the unlisted stocks several times, 'to reflect its view of market information and circumstances'. On this occasion, there were more write-downs while the fund’s interim report had already revealed around £113 million of unquoted company write-downs in the first half of last year including Sabina Estates, which was sold from the fund for around half the price paid. Of course, all valuations are simply estimates until realisation, but it is fair to say that the accuracy of internal valuations of unquoted shares is not always easy to judge as they can be impacted by multiple factors. It’s also worth remembering that figures that have been signed off by an independent auditor are not evidence of accurate valuations. Auditors simply review the figures that are provided to them to make sure they make sense and are generally not experts in the relevant sector. They are unlikely, for example, to have a deep knowledge of ground-mounted solar farms and what they are worth. Examples of valuation practices within Business Relief include one manager that uses an independent merchant bank with specialism in its sector to carry out quarterly valuations. Another has tangible assets independently valued while another has its assets valued on acquisition by independent third party specialists that value those assets twice yearly thereafter.
Due diligence on valuations
Advisers looking to recommend unquoted Business Relief investments should consider the following as part of their due diligence process when it comes to valuations: • Who is valuing the underlying assets? • Is there a valuation committee that is independent of the investment committee? • Are there any independent parties on the valuation committee or involved in the oversight of the valuations to eradicate conflicts of interest? • Are the assets being loaned against? • How often are the assets valued to take account of changes in market conditions? Valuations undertaken could identify variations in value and therefore performance early and allow time for action if required. But more valuations could represent higher costs for investors. • If discounted cashflow is the valuation method used, are all the assumptions reasonable and up to date? • Where appropriate, are assumptions independently sourced - e.g., for energy generating assets are current, reputable third party energy price forecasts used? • Are assumptions in line with inflation and what is the justification for the discount rate used?
i
HMRC’s IHT Statistics
INDUSTRY ANALYSIS / HMRC’s IHT Statistics
ore recent figures are delayed by the 6-month lag from date of death to when the IHT becomes due and subsequent time lags while the data from tax returns is prepared for analysis on HMRC’s databases. What we can say, however, is that when the figures for the first half of 2020 are published there is likely to be a notable increase as a result of a spike in deaths from the coronavirus Covid-19 pandemic. This will hopefully be a one-off phenomenon, that should likely be considered an anomaly in future years due to this very unique set of circumstances. IHT receipts received by HMRC during 2018-19 were £5.4 billion, an increase of 3% (£166 million) on 2017-18. It is interesting to note that in the first year of the residence nil rate band (RNRB) from April 2017, the rate of IHT receipts doubled from the previous year.
The latest full release of IHT statistics by HMRC (July 2020) considers 2017/18.
received in IHT receipts 2019/20
£5.2bn
- CHRIS HOOD, SALES DIRECTOR, SENECA PARTNERS
Advisers really prove their value in times like these. If you have toothache, you go to the dentist. Many of the advisers we work with are vastly experienced; why would you not seek the help of experienced financial professionals to ensure your planning is both current and appropriate?
Residential property and gross capital value of estates The gross capital value (the total sum of the value of assets) of estates since 2009-10 increased by around £15 billion to £80.1 billion in 2016-17 and by an additional £20 billion to £100 billion in 2017/18. Around 80% of the increase in the year from 2015/16 was in residential property. That figure dropped in 2016/17 and by 2017/18 was down to around 58% from the previous year. This mirrors the general slow-down in UK house prices in that period, but still represents respectable growth. (12 months house price growth by April 2016 was about 7.9%, by April 2017 it had slowed to 4.9% and by March 2018 to 3.3%. (Source ONS UK National House Price Index). In that context, what is more surprising is the drop in the value of Business Relief claimed since 2014/15 in a period where house price growth, although slowing, continued to push up estate values. There was a significant dip in the value of claims in 2015/16 and 2016/17 The value of business relief claimed in 2017/18 was £2.2 billion. This was a rise of almost £1 billion compared to 2016-17, taking it close to the high of 2014/15. HMRC puts the drop in the amount claimed from 2015/16 to 2016/17 down to the 25% decline in AIM valuations in 2015/16. This also seems to have restricted the proportion of estates exceeding the nil rate band, after exemptions, that used Business Relief with the percentage decreasing in the same period from 5.7% to 4.3% If this is the case, it might also have an impact on claims for Business Relief made in 2018 when AIM experienced major struggles before making a good recovery in 2019. Similarly, the falls suffered by the AIM market in March 2020 as a result of the measures to curb the spread of the Coronavirus could have a similar impact, although the speedy recovery in AIM may result otherwise. And, as mentioned earlier, the expected surge in deaths during the period will likely increase the number of estates claiming Business Relief compared to a ‘normal’ period. Not to mention the housing market recovery in summer 2020 after the release of the pent up demand created during lockdown and the stamp duty holiday announced in the mini-budget. The power of residential property as a driver to IHT receipts appears to vary over a person’s lifetime. According to HMRC’s statistics, “As the age of the deceased increases, so does their tendency to hold assets in cash and securities, as more of their accumulated wealth is no longer tied up in property. Those aged 45 to 64 hold around 15% of their wealth in securities, but this proportion more than doubles to 34% for those aged 85 and over. By contrast, those aged between 45 and 64 hold around half of their wealth in UK residential property, but this proportion falls to around a third for those aged 85 and over.“ From a Business Relief perspective, it is clear that as a person ages, they are more likely to have assets that they can use to acquire Business Relief qualifying assets or against which they can claim Business Relief. Of course, financial advisers must also be wary of when and what primary residential property these clients may have disposed of and how this impacts the RNRB that is accessible to them. In the meantime, projections from the Office for Budget Responsibility (OBR) in March 2020 continue to show IHT receipts soaring, reaching £7.1 billion in 2024/25.
gross capital value of estates in 2017/18
£100bn
2013/14
28,100
2016/17
Percentage increases in IHT receipts from previous year
% of estates above nrb after exemptions claiming business relief
£2290m
5.7%
2014/15
£1600m
2015/16
4.6%
£1250m
4.3%
% of estates claiming
Amount claimed
Refresher:
What is the residence nil rate band
The RNRB exempts a portion of the value of a home’s value (it must have been the deceased’s main residence at some point) from IHT, in the estates of people who die after 6 April 2017. As with the main Nil Rate Band (NRB), it is transferable between spouses (those who are married or in a civil partnership). • In the 2020/21 tax year, the portion is £175,000 per person (£350,000 per couple) • From April 2021, it will increase in line with CPI inflation every year unless HM Treasury decides otherwise. Adding this to the couple’s NRB, equals a combined NRB and RNRB of £1 million+ per couple • The deceased must leave a residence to their direct descendant so that it is “closely inherited” (defined to include children, grandchildren, step-children, adopted children, foster children and the spouses of all this class of person) • The RNRB will be reduced by a rate of £1 for every £2 the value of the estate exceeds £2 million • Unused RNRB can be passed from one spouse or civil partner to the other. It is the unused percentage and not the unused amount that is transferred • When someone has sold, given away or downsized to a less valuable home before they die, their estate may still be eligible to claim a RNRB
the residence nil rate band
+9%
+12%
+22%
+4%
2017/18
+3%
2018/19
2019/20
-4%
£2220m
The impact of the RNRB can be seen on the proportion of UK deaths resulting in an Inheritance Tax (IHT) charge in the 2017/18 figures which dropped by 0.7% to 3.9% from the previous year. The total number of UK deaths that resulted in an IHT charge also dropped for the first time since since 2009-10. In 2016-17 there were 28,100 such deaths, an increase of 3,600 (15%) since 2015-16. In 2017/18 that trend was almost entirely reversed with a 14% drop to 24,200. That said, the March 2020 Office for Budget Responsibility projection, taking into account the effects of RNRB, suggested that IHT receipts in 2019/20 would drop to £5.3 billion. This projection predicts an increase to £5.5 billion in 2020/21, rising to £6.3 billion in 2022/23. And this despite the fact that, in 2017-18, 20,200 estates used the RNRB threshold, and £3.1 billion of chargeable estate value was sheltered from an IHT charge as a result. Since the drop in IHT take that filtered through to 2019/20 was just £200 million, it is clear that there remain strong drivers for growing the value of IHT to the government. Residential property values are high on this list. Speaking to Professional Adviser, LCP partner Steve Webb said the surge in house prices would typically [without RNRB] have led to a substantial increase in IHT revenues for the government.
IHT RECEIPTS AND TAXPAYING ESTATES
Receipts (£m) (LHS)
Proportion of UK deaths resulting in IHT (RHS)
It has taken until 2019/20 for the effects of the introduction of the RNRB to be felt on IHT receipts. They decreased for the first time since 2009-10 from £5.4 billion in 2018/19 to £5.2 billion during 2019-20, a year on year decrease of 4% (£223 million). HMRC states that this is “due to the usual long periods of time between the tax charge being created and HMRC receiving the tax payment".
Source: HMRC
5. Managers in Focus
time investments velocity br manager videos business relief solutions comparison
About the manager
managers in FOCUS / time investments
TIME:Advance operates a renewable energy portfolio invested across wind, solar, hydro and biomass. With 60% of the portfolio invested in wind and solar energy, these complementary technologies work to hedge the UK’s changeable weather to target a consistent income stream throughout the year. All our assets are based onshore in the UK and stretch from solar farms in Penryn, Cornwall, to wind farms north of Aberdeen, Scotland. When considering our impact on the world, climate change is one of the greatest concerns. An investment of £50,000 in TIME:Advance would generate enough clean energy to power nine UK homes per year and the carbon offsetting is equivalent to planting nearly 4,000 trees.* Overall, TIME:Advance generates enough clean energy to power 84,500 UK homes annually, offsetting 74,200 tonnes of carbon – the equivalent to planting over 37.5 million trees.* TIME:Advance offers a powerful opportunity for investors seeking to support clean energy generation, whilst growing a sustainable and tax-efficient legacy for future generations.
Launched in 2013, TIME:Advance is our flagship IHT service for individuals seeking to reduce their IHT liability. Our service targets a net return of between 3% and 4.5% p.a. by investing in a diversified portfolio of asset-backed businesses, including renewable energy, secured property lending, commercial forestry and self-storage. The underlying asset-backed businesses of TIME:Advance target a gross return of c. 6%, which is lower than many other offerings, while still delivering a similar net return. Additional points of differentiation: • Deferred annual management charge (AMC): only taken on exit and only from performance above an annualised return of 3.5% • Independent oversight: Advisory Committee comprised of relevant industry experts • Fee rebate: if early death occurs within the first two years of investment, a portion of the fees are returned • Dedicated in-house investment specialists for each subsector of the portfolio
time-investments.com 020 7391 4747 questions@time-investments.com
our offer - time:advance
investment case study
With over 24 years’ experience running Inheritance Tax (IHT) services, the investment team at TIME Investments (TIME) manages over £700 million of tax-efficient investments for over 5,000 private investors seeking to maximise the financial legacy they leave for future generations. TIME specialises in Business Relief (BR) investments and manages one of the longest running BR services in the market. To date over 7,500 investors have invested in our IHT services and we hold a 100% BR track record. Our nationwide Business Development team of 30 is dedicated to supporting the adviser community and professional connections. Recent award wins: • Investment Week Tax Efficiency Awards 2019/20: - Tax-efficient Group of the Year - Best IHT Portfolio Service - Best AIM Portfolio Service – Tax Efficient and Estate Planning Specialist • Growth Investor Awards: - Best BR Investment Manager Listed 2019 - Best BR Investment Manager Non-AIM 2018
time:advance asset map
how TIME:Advance’s generates renewable energy
84,500 homes
260,000 Mwh
powered per year
52million 5w lighbulbs
74,000 tonnes of carbon
offset per year
37 million trees
Equivalent to planting
Energy generated per year
16,500 homes
Footprint of
*Source: TIME Investments, data correct as at 31 March 2020
managers in FOCUS / velocity
The following example is of a typical trade finance transaction. The Company develops and manufactures specialist medical equipment and its customers are typically hospitals and universities. They have an order for £300,000 of equipment and know that their customer will take about 6 weeks to settle the invoice. But in the meantime, the Company also has to settle the bills from its suppliers. Therefore, the Company has a financing gap. To solve this, Velocity Trade Ventures advances to the Company the sum of £270,000 when it issues the invoice to its customer. Some 6 weeks later, the customer settles the £300,000 invoice by remitting the amount to a dedicated bank account. (If the customer fails to settle the invoice, Velocity Trade Ventures may then make a claim under the credit default insurance.) When the customer pays the invoice, the amount advanced is repaid to Velocity Trade Ventures plus the fees and interest due. Then the remaining balance is transferred to the Company.
velocity.co.com 020 7139 4450 investor-relations@velocity.co.com
our offer
Velocity was set up in 2015 as a vehicle to facilitate, via our SEIS and EIS Funds, participation in exciting companies which have technology at their core. The Velocity Capital Advisors founders come from entrepreneurial backgrounds, which we believe is a real asset to our business and the investee companies. Velocity has been operating for over four years now, and in those years the SEIS and EIS funds have achieved an investee company cash exit of 6.5x, and the overall current performance of the funds is estimated to be 3.5x to 1.3x. In 2020 we launched our ground-breaking new IHT portfolio service, Velocity Credit Ventures.
Our new IHT portfolio service offers investors the choice of three different strategies with target returns of between 3% and 6% per annum. The service will invest into two companies that make loans to UK businesses. As the principal risk for any lending business is default by the borrower, the trading companies purchase credit default insurance to cover that risk, except where the obligor is a State Entity. The focus of the trading companies is capital protection, growth and liquidity. All of the investor’s capital is deployed into the trading companies. No fees are charged directly to the investor except for a 1% fee on withdrawals.
Typical Trade Finance Transaction
shareholders
velocity trade ventures
dedicated bank account
buyer ltd
supplier ltd
receivable
credit insurance
Pays 100% Receivable
Security
Discount Value of Receivable less interest
Target Return
Premium
managers in FOCUS / br manager videos
br manager videos
managers IN FOCUS / br solutions comparison
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6. What's on the Horizon?
coronavirus: what's ahead POTENTIAL DIVERGENCE FROM EU RULES what the managers say
coronavirus: what's ahead
WHAT'S ON THE HORIZON / CORONAVIRUS: what's ahead
At the start of the outbreak in the UK the death toll from Covid-19 was projected at between 20,000 and 400,000.
y the third week of July, the actual figure had surpassed 45,000, with new deaths down to single figures, but the risk of a devastating second wave still a concern for top doctors. With regional lockdowns still taking place and ongoing restrictions outside of those regions, we are certainly not yet in the clear and there are still obstacles to businesses looking to reestablish themselves as we emerge from the strict conditions that left the majority unable to trade.
Given the speed of Business Relief qualification and the nature of estate planning, it’s fair to assume that the elderly and those with underlying conditions and vulnerable health are more likely to have Business Relief investments. The Guardian reported in June that, “Older people are more likely to die in general, and that effect is stronger with Coronavirus: out of every 100 people who die, 88 are over 65.” And while death rates are higher among the less wealthy, wealth is not a protection from the virus with the richest 10% of the UK population making up eight out of every 100 Coronavirus deaths. What’s more, the death toll across the UK in the year to mid June showed that the excess death rate (those in addition to the average number of deaths across the last five years) stood at 20.5%. The inevitable upshot is that there is likely to be a jump in Business Relief claims as a result.
more business relief claims
so what does this mean for business relief?
There are two forms of insurance associated with Business Relief. One that offers some protection if the Business Relief-qualifying investments lose money and one which is a form of life cover, usually at an additional cost. This insurance will cover the IHT if the client dies before the two-year mark. The insurance industry is generally well prepared for major loss events, including pandemics, so there is no particular suggestion that insurers working in this sector will have issues with claims and payouts connected to the higher mortality rates generated by Covid-19. However, it is possible that underwriting models may be reassessed so that new policies impose stricter eligibility criteria and/or the availability of new policies will become scarcer and/or more expensive with insurers reviewing their profitability.
insurance options
Current circumstances are prompting investors to question if they have all the later life planning they need - leading to a surge in advice enquiries. People have been forced to focus on the realities of life, including death and what it leaves behind. For businesses in Business Relief-qualifying trades, the value of that advice could be significant and potentially immediate where business owners who have owned the company for two years or more are ill or have recently died. Or where a newly-acquired, ‘life’s too short’ mentality has pushed business owners with concerns over how retirement and sale will impact the value of assets they can pass to their family. For individuals, there may be a greater incentive to opt for speedy IHT mitigation where gifts have been exhausted, which is what Business Relief offers.
more demand for advice
Pension values have been hit. In April, the Times reported that savers in more than 350 pension funds had seen the value of their investments fall by 25% since the start of the year, and some had lost half, due to market drops as a result of Covid-19. While pensions are generally intended to be long-term investments and there had been significant market rebounds since then, there are still persistent worries about the global economy. And according to Scottish Widows research over three million people had reduced or stopped completely their pension payments as a result of the Covid-19 crisis, leaving a hole in pension savings for 10% of UK adults. With the financial pressures brought by lockdown, furlough and expected job losses, it’s not surprising that the first quarter of 2020 saw the value of pensions withdrawals at the highest recorded for any year since pension freedoms began. The problem with this for those needing to replenish their pension pots is that once you start to access your pot, you can no longer pay as much into your pension. The annual pension allowance drops from £40,000 to £4,000, a particular issue for the more wealthy. This may leave excess funds looking for growth in a home that, like a pension, doesn’t ordinarily attract IHT, such as Business Relief-qualifying shares. And for younger people, Business Relief combined with Enterprise Investment Scheme qualification, which is income tax and CGT free and offers loss relief to protect a substantial portion of investment, may also be suitable. Unquoted Business Relief-qualifying investments also hold advantages during times of uncertainty as they can mitigate volatility risk since they are not subject to the same systemic risk as all listed investments. Private trading companies are generally valued solely on their fundamentals, rather than short-term sentiment.
pension issues
The government has acted swiftly to restart the housing market and try to head off a predicted housing market crash with the announcement of an eight month stamp duty holiday for properties valued up to £500,000 in the July mini-budget. This has already had an impact with data from Rightmove showing that asking prices are now 2.4% higher than in March pre-lockdown and 3.7% higher than in July 2019. And by the third week of July, year-on-year buyer enquiries were up 75% in Britain since the start of the month. Given that it is residential property that makes up a significant part of many estates, this means many are now likely to remain well above the nil rate band, suggesting that demand for IHT planning will remain strong.
HOUSING STIMULUS SUPPORTS ESTATE VALUES
The cost of the measures to control the virus has been huge, causing the budget deficit to skyrocket by £192.3 billion, pushing the country into recession and driving up unemployment. According to the Office for Budget Responsibility’s (OBR) Fiscal Sustainability report of July 2020, the UK is on track, “ to record its largest annual fall in GDP in 300 years.” The question now is how all of this will be paid for. Chancellor Sunak recently announced a review of Capital Gains Tax (CGT) and there have been loud calls for a wealth tax and increase in IHT (although even doubling it would not represent a huge contribution to government debt repayment), with or without abolishing or cutting some of its attendant reliefs. But political support for Business Relief since its inception 44 years ago has always been based on sound arguments that are stronger than ever in current circumstances: Companies benefitting from Business Relief-incentivised investment are just the types of firms needed to drive growth and economic recovery. If we look at AIM, where a majority of the quoted companies qualify for Business Relief, Grant Thornton’s Economic impact of AIM report of June 2020 found that, government support, including the availability of Business Relief has, “ borne fruit in creating a cohort of businesses that are delivering substantial value to the wider UK economy.” The figures are indeed impressive:
PROVEN VALUE DESPITE SPECULATION
For context, the Gross Value Added (GVA) to UK GDP contributed by the insurance and pension sector in 2019 was £28.6 billion, the architectural and engineering sector contributed £26.6 billion and the motion picture, video, TV programme and broadcasting sector contributed £21.8 billion. The report goes on “In addition, AIM companies made a significant corporation tax contribution of £3.2 billion to the Exchequer”. When considered against the £480 million business relief cost in 2018/19 (a large portion of which is attributable to private company Business Relief-qualifying companies rather than AIM-quoted ones), this seem like a good return. Then there’s the productivity gains that these companies can offer with AIM companies more productive than the national average with productivity of £77,700 GVA per employee compared to £56,387 nationally. According to Grant Thornton, “the role of fiscal incentives will continue to be particularly important to support scaling businesses including those on AIM.” While the government was elected on a manifesto of not raising taxes and an end to austerity, there is still fierce speculation that the chancellor will need to do one or both. It remains to be seen if the other possible solution, to make no cuts at all and instead invest in the country to encourage economic growth, signs of which were clear in the July mini-budget, will work well enough and fast enough to throw the manifesto out the window.
GVA AND EMPLOYMENT CONTRIBUTION OF AIM ON UK ECONOMY IN 2019
Source: Grant Thornton Analysis
£33.5bn
direct
430,387
£20.3bn
294,085
indirect
£13.4bn
181,118
induced
£67.2bn
905,590
total
GVA
Employment
Advisers and investors need to consider the risks managers offering double digit returns need to take in order to achieve those returns. We think that greater transparency is needed at the investment level to understand the risk and return profile and whether any gearing is used.
- Simon Housden, Sales and Marketing Director, TIME Investments
potential divergence from eu rules
WHAT'S ON THE HORIZON / potential divergence from eu rules
In January, then-chancellor Sajid Javid told the Financial Times: “There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union - and we will do this by the end of the year.”
E
ver since, there has been speculation about what kind of ‘equivalence’ or otherwise will be agreed with the EU on cross border regulations. British businesses may well have concerns that no more friction than necessary is introduced into the UK’s business relationships with the EU, but there is also very likely to be concern in Brussels. There is anxiety that the UK will undercut EU standards to gain a competitive advantage over the bloc and insists the guarantees are the price of the no-tariff, no quota, free trade deal in goods. For its part, the European Commission has stated that it will not accept regulatory “cherry picking” from the UK in negotiations over the country’s future relationship with the bloc with regard to financial services. Until Brexit, any changes made to schemes judged to be state aid had to be approved by the European Commission which looked to preserve a level playing field across member states. State aid can occur whenever state resources are used to provide assistance that gives organisations an advantage over others. An example is schemes set up to stimulate growth in a target sector and this takes in Business Relief and the Enterprise Investment Scheme. As a result, it is possible that rule changes that would not have been possible during the UK’s EU membership will be allowable after the end of the transition period on 31 December 2020, which Boris Johnson has refused to extend despite delays caused by Coronavirus. Much has been made in the past of the government having its hands tied by the European Commission when unpopular changes were made. This excuse is no longer available to UK lawmakers, but greater scope in what can be changed certainly is. The latest reports suggest a high probability of a ‘no deal’ Brexit, or at most a ‘basic’ agreement being the basis of trade between the UK and the EU after the transition period ends. If this is the case it would seem that the UK will be in a position to gain the competitive advantage that the EU has been looking to neutralise during negotiations.
SMEs form a hugely important part of the UK economy, accounting for 99.9% of all private sector businesses and 60% of all private sector employment. SMEs can be well served by short term lending which also provides investors with an attractive return.
- Rupert Strachwitz, CEO, Velocity Credit Ventures
what's on the horizon / WHAT THE MANAGERS SAY
What are you hoping to see in the next few months?
Primarily, a vaccine that deals with C-19! Probably pretty wishful given the scale of what the world is dealing with currently but some clarity and consistency around government policy, tax rules and the regulated framework would be very helpful all round.
How do you see coronavirus impacting BR?
Certainly making investors more cautious about what they are committing to against a backdrop of probable market volatility. But BR in isolation, and the reasons for using it, ought not to change too much. Secure and dependable assets are likely to be high on many agendas.
Where could the market develop or improve?
Following the Office of Tax Simplification review of IHT we would welcome simplification of the structure of IHT including the various nil-rate band allowances. In the wake of COVID-19 we expect more advisers will be asked about later life and estate planning, greater understanding about the options available will help the BR market to continue to grow.
We would not envisage any changes to BR being necessitated by the COVID-19 outbreak. We would encourage the Government to preserve the tax reliefs available for investments in UK un-quoted companies.
The eradication of the COVID-19 virus is at the top of everyone’s wish list. Over the next few months, we would hope to see a staged return to business as usual across the UK and a continuation of the support mechanisms designed to assist SMEs during this period of economic uncertainty.
Our mantra is that transparency and gold-standard governance must be a core part of any BR offering. We have built both of these key elements into our Service. Furthermore, we are one of the first managers to become a signatory to the UN Principles for Responsible Investing and are applying ESG compliance to our investments. We hope that other participants in the BR market follow suit.
We expect that there will be increased scrutiny of the assets held within existing BR portfolios both for clients who are already invested and for new clients who are considering perhaps acquiring shares in these businesses. Advisers will want to be certain that the valuations of existing assets are accurate under these extreme circumstances. Our Service has no legacy loans which might therefore negatively impact valuations and we can focus our efforts on lending to businesses which are insulated from the COVID-19 impact. We also see that the ‘new normal’ in business will be an increasingly digital one. Years of movement towards digital transformation has been compressed into one month. The demise of high street retail and offline businesses has been accelerated; home working will be recognised as standard practise – all roads point to the digital economy and digital businesses.
Perhaps not surprisingly, we can only hope that we can see real progress in our global fight against COVID-19 and a move towards normalising our economies once more. Whilst there will undoubtedly be many challenges, including economic ones, we look forward to a normalising business environment where we can continue to back energetic and progressive UK businesses.
Job Title, Octopus Investments
Text here
BR strategies should be considered as mainstream investments. They are investments with an additional tax benefit. If investors considered that they could invest in a portfolio of fully secured assets and obtain a 4% natural return that would be attractive in its own right. IHT exemption alongside is a huge bonus.
SAM BARTON
Close Brothers Asset Mgmt
HUGO WOOD
SARASIN & PARTNERS
TIME INVESTMENTS
Certainly making investors more cautious about what they are committing to against a backdrop of probable market volatility. But BR in isolation, and the reasons for using it, ought not to change too much. Secure and dependable assets are likely to be high on many agendas
learning objectives cpd and feedback about intelligent partnership disclaimer
7. Further learning
learning objectives
further learning / learning objectives
HOW DID YOU DO?
Covered in section 2. Coronavirus developments, Budget news
Understand how Business Relief sits within the current IHT landscape
Covered in section 2. NAO management of tax expenditures report. Covered in section 6. Coronavirus; what’s ahead
Recognise the various factors that will affect the Business Relief market in the coming months
Covered in section 6. Coronavirus; what’s ahead, Potential divergence from EU rules
Understand the types of open Business Relief offers available on the market
Covered in Section 3
Be able to benchmark current products and providers against each other on key investment criteria
Covered in Section 5
Be aware of the key fees and charges applied by Business Relief managers
Identify the main developments and news in the Business Relief market
CPD and feedback
further learning / cpd and feedback
Intelligent Partnership has achieved accredited status from the CII and PFS. Members of these professional organisations represent the majority of the insurance, investment and financial services industry.
R
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