Limiting Inheritance Tax Liability – The Time To Act Is Now

We are approaching the time of year when tax planning is typically very popular. With this in mind, we thought we’d remind readers of our very popular service designed to limit Inheritance Tax (IHT) liability. IHT kicks in for estates of £325,000 or more. See more on our service below.

What are the main benefits of investing in an IHT portfolio? 

If you are happy to take on significant investment risk, the benefits include:

  • Pass on more of your wealth free of IHT – shares in BPR-qualifying companies can benefit from 100% IHT relief.
  • Speed – IHT relief kicks in after just two years. This compares favourably to other forms of estate planning.
  • Simplicity – investing in an IHT portfolio requires a simple transaction, similar to investing in other tax-efficient products. There are no eligibility criteria for income, health or age. Investors are, however, required to answer some questions about their investment knowledge and experience.
  • Control – your money is not locked away. Should your circumstances change or should you need access, you can make withdrawals. The amount you withdraw will no longer be IHT free, but what remains invested should be.
  • Professional management – the portfolio is managed by a professional team, which researches and selects the investee companies and monitors them to ensure they remain BPR qualifying.

What are the main risks of investing in an IHT portfolio? 

  • Your capital is at risk – your investment can fall as well as rise in value so you could get back less than you invest. In addition, because BPR-qualifying companies tend to be smaller and subject to less stringent checks than those quoted on the main London Stock Exchange, the risks are greater.
  • IHT relief is not guaranteed – tax benefits depend on circumstances and tax rules can change. To benefit from IHT relief you must hold the investment for at least two years and on your death and the companies must maintain their qualifying status. The government may change the rules on BPR in future.
  • Investments may be difficult to sell – shares in unlisted and AIM-listed companies are more illiquid than those quoted on the main London Stock Exchange, so they may be more difficult to sell.
  • Not for everyone – IHT portfolios are only for experienced investors, who fully understand and are happy with the benefits and risks. You should only invest if you can withstand loss of capital.

Loan Offer Latest

Yes You Can, rated B, for £30,000 with an 11 per cent fixed yield over five years, is now filled. Project Rhapsody rated A+, with an 8 per cent fixed yield for three years is also filled. More loan offerings will land on site soon.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had one bad debt so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.