A discretionary managed service, designed to offer multiple succession planning and tax efficiency opportunities for business owners – free from inheritance tax.
Our Inheritance Tax Services are backed by Business Relief legislation, which means that advised clients should be able to pass capital to their beneficiaries with 100% inheritance tax relief, whilst also keeping complete control of their capital – as long as they have held the shares for at least two years, and at the time of death.
The Stellar Business Inheritance Tax Service is created for business owners who are wishing to maintain or improve tax efficiency within their existing business – or by using the proceeds following the sale of their company. It could be relevant if a business has excess capital, and the owner is concerned that it may not qualify for certain tax reliefs; or if the business has realised a capital gain; or if it has been sold, and the previous owner wishes to maintain inheritance tax efficiency.
The Stellar Business Inheritance Tax Service provides clients with access to a range of qualifying business activities, which seek to qualify for a number of tax benefits – including Business Inheritance Tax Relief (BR), otherwise known as IHT Business Property Relief.
Investors will have full control over the selection of our qualifying business activities, so that their adviser can tailor their portfolio to suit their investment objectives.
Our Stellar Business IHT Service can also be tailored to the model of an investor’s current business, or an entirely new business altogether – ensuring an adaptable structure which fits all requirements.
Investing in our Inheritance Tax Services carries risks and is not suitable for everyone. Tax reliefs are subject to change and dependant upon personal circumstance. There is no guarantee that an investor will receive a full return. Please find further details of the risks here.
Click on the following links to access our useful resources.
Reasons to Choose Stellar Business Inheritance Tax Service
Relief from IHT, and other tax planning opportunities
This is key to our investment approach and intrinsic to our service
Investments are made through the business, to provide full control
Providing confidence and reassurance, today and in the future
Offers uncapped returns from qualifying business activities
Enabling the value of the business to pass to beneficiaries
Opportunities to blend investment sectors to meet individual objectives
Our Investment Strategy
Our Stellar Business Inheritance Tax Service can be accessed in two ways – either via the client’s current business (Maintain Strategy) or by creating a new business (Enable Strategy). Whichever route is chosen – Maintain or Enable – the investor will retain full access to their capital, as well as using a company structure that they are familiar with.
The Maintain Strategy
An investor’s existing company will make investments across our range of qualifying business activities. This strategy is designed for active business owners who are:
- Concerned about exceeding working capital rules and the effect this may have on the tax-efficiency
of their business assets; or
- Considering turning an investment business into a trading business, to qualify for additional tax reliefs.
The Enable Strategy
The proceeds from the sale of your business will be used to create a new Stellar Business Company (or
Companies) which in turn will make investments across our range of qualifying business activities.
This strategy is designed for business owners who have recently sold all or part of a business and are seeking to:
- Mitigate or defer capital gains tax; or
- Maintain inheritance tax efficiency; or
- Benefit from Entrepreneurs’ Relief.
We aim to generate a target return of 5% per annum for each Stellar Business Company from our range of qualifying business activities. Clients are able to select which of these activities they wish their Stellar Business Company to participate in, however this choice will affect the target return.
Please note that this is a target only and is not guaranteed. The target return is quoted before the effect of any adviser charges which will, if paid, reduce the target return.
There are never any guarantees in the world of investment, so it’s essential that advisers make their clients aware of the risks. Our Inheritance Tax Services are not suitable for everyone, so here’s a summary of what an investor needs to know before getting involved – alternatively, click here for more information.
- The value of a Stellar Business company, or any income derived from them, can fluctuate.
There is no guarantee that the full value of an investment will be returned, or that sufficient investments in qualifying business activities will be made within the expected timetable, or at all.
- Qualifying business activities are not certain.
Qualifying business activities may subsequently cease to qualify for Business Relief. In such cases, Business Relief could be lost or delayed.
- Tax reliefs are not guaranteed
The rate of tax, tax benefits and tax allowances are subject to change and are also dependant on personal circumstance. Plus, any changes to what constitutes a qualifying business activity may have a material adverse effect on the value of the business, or Stellar’s potential to achieve the objectives of the service.
- Conflicts of interest
The interests of one group of investors may not coincide with another, or an interest of Stellar. In the event of a conflict, Stellar’s investment committee will work to ensure it is resolved fairly and in lie with our conflict policy.
- Investments are long-term and high risk.
Interests in the IHT companies are not liquid so although an investor can request a withdrawal from a Stellar Business company, there may be a delay. Exits are reviewed quarterly and there is no guarantee that an exit will be possible. Such interests are also considered to be higher risk than securities listed on LSE.
- Past performance is no indicator of future success.
Fees and Charges
|Initial Subscription Fee||1.5%|
|Management Fee||1% (plus VAT) per annum|
|Administration Fee||0.5% (plus VAT) per annum|
|Performance Fee||20% of excess above target return|
|Exit Fee (where applicable)||2% (plus VAT)|
To gain a full insight into our Stellar Business IHT Service, explore the following resources:
- Document Downloads – featuring brochures, application forms and more
- Adviser Toolkits
- Independent IHT Liability Insurance Policy
For further information, complete the form to register for our Stellar Business IHT Service email campaign.
Investing in Inheritance Tax Services carries risks and is not suitable for everyone, read more.
for more information
The Stellar Business IHT Toolkit
We provide a number of tools to guide advisers on how to tailor our Stellar Business Inheritance Tax Service for their clients. Please click below to view our specialised toolkits, featuring case studies and more.
Independent Inheritance Tax Liability Insurance – Two Year Cover
For advisers recommending Business Relief, AIG offers a term assurance policy – specifically designed to cover any liability for inheritance tax in the first two years of planning.Find out more
Frequently Asked Questions on Stellar Business IHT Service
What is the inheritance tax threshold?
Inheritance tax (IHT) is charged on the value of everything owned by your client after their death, in excess of the Nil-Rate Band (NRB) – which is a tax-free allowance, currently set at £325,000 per individual and £650,000 for married couples and civil partners.
Legislation introduced in 2016 offered qualifying estates an additional tax-free allowance known as the Residential Nil-Rate Band (RNRB), which was phased in over four years and now provides a further £175,000 per individual on top of the standard NRB threshold. However, there are limitations on which estates are entitled to this additional threshold, and the relief is tapered for estates valued at over £2 million.
Any value in excess of the NRB, and the RNRB if relevant, is taxed at 40% – and the nature of this tax means that their beneficiaries are left to pay the bill. Added to this, rising house prices mean that more families than ever before are falling into the inheritance tax trap – which underlines the importance of careful inheritance tax planning.
Can clients access their capital?
While traditional solutions such as gifts and trusts may work for some, a disadvantage is that clients have to give up control or access to their capital for it to qualify for IHT relief.
One of the more effective IHT solutions is Business Relief (BR). This is a piece of government legislation offering IHT relief. BR provides clients with flexibility and capital growth, without capital falling outside of their estate.
Investing in assets that qualify for BR such as British forestry, hotels and residential developments, or stocks on the AiM Index, will fully relieve any IHT liability after just two years providing they are held at the time of death. In contrast, gifts and trusts, require seven years before they qualify for IHT relief.
Read the full story here about how Business Relief can give the client control and access to their capital.
What are the advantages of using BR over a trust?
Despite popular opinion, the tax advantages that a trust offers have been steadily reduced by successive governments over the past few decades. In 2006, the government announced reforms which meant that many assets which moved into trusts became subject to a 20% IHT levy. Not only that, in 2016, the government increased the income tax rate for dividends held in trusts and removed a 10% tax credit.
As a result, many advisers believe that families are going to lean towards a different approach to managing their inheritances via a trust.
As well as being able to obtain IHT relief up to five years faster than trusts, IHT planning using BR also offers investors greater security, does not take away control from their estate and also offers plenty of flexibility to the client. By mitigating several layers of risk, BR can be seen as the safer option for less experienced investors.
To find out more about BR and how it could work for a number of clients, get in touch with one of our experienced team members by clicking here or by calling 020 3907 6984.
Take a look at our wide range of Inheritance Tax Services
Stellar AiM IHT Service
A discretionary managed portfolio that mitigates risk through a diversified selection of 40 AiM stocks. This service is available for advised clients, on many of the UK’s largest wrap platforms.
Stellar AiM ISA IHT Service
The Stellar AiM IHT Service is also available for investment via an ISA, which enables investors to benefit from both Business Relief qualification and all ISA tax benefits. This service is also available on various wrap platforms.
Stellar Growth IHT Service
This discretionary managed service involves the creation of a privately owned limited company for each investor, to access a portfolio of asset-backed Investment Sectors – targeting 5% growth per annum.