"It can be galling to think that after a lifetime of paying tax building up your estate, your beneficiaries may have to pay another raft of tax when you pass it on"
According to the group, it combines Business Property Relief (BPR) with a group insurance policy to offer investors a solution that provides immediate protection from IHT for beneficiaries while maintaining access and control over their invested assets.
Typically, it takes two years for shares to qualify for BPR. During this period, if the shareholder dies, their estate would continue to be liable for IHT on the value of the investment. However, the Foresight Accelerated ITS is specifically designed for those who want their assets to have immediate protection from IHT and the peace of mind that comes with this. The product automatically includes an insurance policy with a Lloyds of London syndicate which covers the two-year gap between the purchase of a qualifying investment and the availability of BPR.
If an investor dies during the first two years, with Foresight Accelerated ITS, the proceeds of the insurance policy will pay out 40% of the investment to the named beneficiary or beneficiaries, which can be used to offset their IHT liability. After the two year qualifying period has elapsed, the shares should qualify for BPR, at which point no IHT would be due on their value, subject to the investor continuing to hold the shares at death. Therefore, once this initial two-year period is over, the insurance cover will automatically cease.
The launch comes as more people are becoming liable to inheritance tax. In 2015/16, HMRC receipts for IHT were the highest ever recorded; generating £4.6bn in revenues, with the consensus being that this amount will grow still bigger in following years.
Hugi Clarke, Director at Foresight said: “Inheritance Tax is widely seen as the most unfair tax of all – it can be galling to think that after a lifetime of paying tax building up your estate, your beneficiaries may have to pay another raft of tax when you pass it on. And the products that are already available to mitigate IHT often come with a sting in the tail. For example gifts and trusts can take several years to be fully effective and can mean giving up access to, and control of, assets.
This combination of insurance cover and BPR provided by the Foresight Accelerated ITS gives peace of mind for investors, offering an immediate solution to their IHT problem as soon as shares are purchased. Anyone with a single estate valued at £325,000, or a joint estate of £650,000 really should be looking to mitigate their IHT risks, as should all of those who are in real danger of house-price increases and inflation pushing them into these brackets in coming years. The Treasury is taking more and more from IHT – people need to plan in advance to protect the assets they have worked so hard to build during their lifetime.”
