Tax

UK Private Bank Launches IHT Portfolio Service

Nick Parmee 9 October 2007

UK Private Bank Launches IHT Portfolio Service

The UK arm of international private bank Butterfield has launched a new inheritance tax planning service allowing clients to create an individual portfolio. It is based on the selection and management of alternative investment market shares that qualify as a "business asset" and/or business property and carry tax benefits. For example, investments in qualifying AIM and unquoted companies are eligible for business property relief and are free from IHT once the investment has been held for a minimum of two calendar years. In the capital gains tax field, qualifying shares are allowed a significantly higher rate of business asset taper relief, reducing the tax payable on any gain to a maximum effective rate of 10 per cent after two years. Another benefit of having the portfolio managed as a distinct entity is that it allows for a clear audit trail, proving that the rules have all been met. Each portfolio will be made up of a minimum of 20 (30 if size permits) different companies from a varied group of sectors. Each portfolio may be different depending on the timing of the investments made. Depending on the time of investment and availability of suitable issues, it may be possible to include some shares that qualify for the enterprise initiative scheme. These shares carry additional benefits in that a purchase can entitle the shareholder to offset capital gains made three years prior or one year after the purchase of an EIS qualifying issue and the shareholder may also be entitled to 20 per cent income tax relief (20 per cent of the amount invested in the EIS qualifying issue). The service has an initial minimum investment of £50,000 ($100,000).

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