Posted on: 4th April 2022
If you are confused over the current buzzword of business property relief (BPR) and how it works to benefit you following your death, it can make you very dismissive straight away. After all, no one gets to take it with them as they say.
Financial advisers are always the best people to get the full picture when it comes to BPR-qualifying investments, able to get through all of the online myths and get down to the real benefit that it can hold for your estate.
What Purpose Does BPR serve?
The purpose behind BPR is to facilitate business continuity following the death of the owner or an investor into it. With inheritance tax (IHT) payable on the portion of the estate that exceeds the IHT threshold, it would make for extremely challenging times for those businesses to survive with that tax due on the value.
If – at the time of death – the estate’s total value falls beneath the IHT threshold (currently at £325,000), there is no tax to pay. This is known as the Nil Rate Band (NRB). if the estate was worth more than this band, it becomes subject to inheritance tax which currently sits at a rate of 40%.
So, where BPR comes into play is that it enables certain business assets to be transferred to your beneficiary with either a 50% or 100% in inheritance tax relief.
Okay, so now we have your attention, and you may be thinking of how this helps with your estate planning, especially when it comes to the area of a posthumous transfer of your wealth and preventing your loved ones from being hit with a hefty tax bill on what they inherit from you.
Investing in assets that qualify for BPR has the potential to increase your wealth and talking about this with a qualified financial adviser will give a better understanding of both the rewards and potential losses – after all, it is anand should be treated the same as any other.
An adviser with the knowledge can help fill in all the blanks when it comes to BPR, including how any potential loss in the capital can be outweighed by the money saved from the IHT exemption.
Maintaining Your Wealth
After 7 years, the gifted property is no longer classed as part of the deceased’s estate, meaning that any assets you give away more than 7 years before your death are not subject to inheritance tax. Giving away assets comes with risks, as deteriorating health or mobility will incur costs in adapting your home to suit – or even moving home or into nursing care.
With a BPR qualifying investment, you can hold onto your wealth and own the capital and profit that it generates. After just two years, your shares are exempt from inheritance tax.
There is much to be said for the true benefit of Business Property Relief Northwest, and if you want to know more you need to talk with independent financial advisers Cheshire to get the full landscape.
Contact the team at BPR qualifying investments help you towards your estate planning.today to find out how