UK property fund manager Tritax and commercial property investment and asset manager Brooks Litchfield have launched a new asset-backed inheritance tax fund, designed to provide 100 per cent tax relief for individuals with assets of over £325,000 (just over $500,000) after two years, rather than the usual seven. It also offers an income option at 3 per cent per annum or pure capital growth, with total target returns at 4 per cent per annum.

By investing in asset-backed qualifying trades seen as having stable, predictable income streams, the Wealth Preservation Fund aims to avoid the higher risk profile associated with speculative development schemes and the short-term volatility of equity-based products.

The fund is targeting specific types of commercial property, such as branded budget hotels and healthcare facilities.

Money can be returned if desired, which is not the case with gifts and trusts. It will retain a cash reserve equivalent to 5 per cent of its NAV.

“Our experience shows that many people are reluctant to hand over their investments permanently, regardless of their IHT bill, for fear of needing access to capital in later life to fund care costs, or for fear of their beneficiaries losing some, or all of their assets due to divorce or financial mismanagement,” according to Tritax partner Colin Godfrey. He believes his fund allows investors to provide for the next generation, while retaining control of their wealth.