TIME:Advance. An innovative approach to inheritance tax

Transcription

1 TIME:Advance An innovative approach to inheritance tax

2 TIME:Advance Inheritance Tax Solution Contents Welcome to TIME 3 A taxing problem 4 The simple solution 5 About TIME Investments 6 Key benefits 7 Risks 8 Flexibility 9 Investment strategy 10 Independent Advisory Committee 11 How do we invest? 12 Fees 13 Time for action 14 Important information It s important that you take the time to read and consider the risks involved with investing in TIME:Advance. The key risks are summarised on page 8. Contact us questions@time-investments.com time-investments.com 2

3 Inheritance Tax Solution TIME:Advance Welcome to TIME TIME Investments has built a solid reputation for creating innovative and reliable investment products that meet investors needs. Innovative solutions, defensive investments TIME provides tax efficient investment solutions and we re proud to say we re rather good at it our original Inheritance Tax service boasts an impressive 19 year track record of successfully achieving Inheritance Tax savings for our investors. What stands us apart in our market is our focus on seeking consistent stable returns for our investors, which we deliver through a defensive investment strategy. We pride ourselves on offering real transparency around our products, what we invest in and what the risks are. Above all we always keep our clients at the forefront of our mind and their best interests at heart. Inheritance Tax (IHT) is an area we re passionate about and one we ve been involved in for many years. The TIME management team s IHT service was one of the first to utilise Business Property Relief to offer IHT mitigation for investors. Background to IHT When you die your assets are totalled up to form your estate and it is your estate that is considered when assessing whether IHT is payable. The Government has set a nil rate band of 325,000, above which IHT is payable at a rate of 40%. In the Summer Budget 2015, the Chancellor froze the nil rate band until 2021 and Nigel Ashfield Managing Director TIME Investments TIME:Advance offers you a fast, simple and effective solution to reduce IHT whilst retaining ownership and control of your money should you need it. announced a further allowance, known as the family home allowance, to be gradually introduced from April 2017 to help individuals pass on their family home to direct relatives. This new allowance can only be used in relation to the main family home and will initially be worth 100,000 in 2017/18, rising to 175,000 by 2020/21. The nil rate band of 325,000 will continue to apply to assets other than the family home. Overall, it s clear that despite this new allowance, there are a significant number of people for whom IHT will continue to be a concern. There are a number of ways to mitigate your exposure to IHT, such as using trusts and gifts. However, these can take many years to be fully effective, can incur upfront tax charges and may require you to give up control and use of your assets. Given that you may need to access your savings in later years, for example to supplement your pension, this is less than ideal. Introducing TIME:Advance TIME:Advance is a discretionary management service that allows investors to access Business Property Relief (BPR) to mitigate their IHT liabilities. BPR is a wellestablished tax relief provided by the UK Government as an incentive to invest in trading businesses, which in turn support the UK economy. TIME:Advance has been designed to offer investors a faster solution to IHT, within a simple and flexible structure. What s more, it leaves you in control of your money, which can be accessed should you need it. 3

4 TIME:Advance Inheritance Tax Solution A taxing problem The threshold above which IHT is payable has been frozen until Record numbers of families now face having to pay IHT due to a combination of factors including inflation, the increased need to save and rising residential property prices. The cost of doing nothing Let us assume your estate is worth 575,000 and you invest 250,000 through TIME:Advance (although you could invest any amount from 25,000 upwards). The effect on your estate could be illustrated simply as follows. The Do nothing option Investing 250,000 in TIME:Advance Estate value 575, ,000 Less nil rate band* ( 325,000) ( 325,000) Estate above nil rate band Less investment in TIME:Advance** 250, ,000 0 ( 250,000) Taxable estate 250,000 0 IHT payable upon 40% ( 100,000) 0 Estate after IHT 475, ,000 IHT saving after two years 0 100,000 * For the purpose of this example, the family home allowance has been ignored. ** This table is for illustration purposes only, based on current IHT rates and ignores investment returns achieved through TIME:Advance and all fees and charges payable in relation to TIME:Advance. You should note that fees and withdrawals will reduce the size of your portfolio, and any withdrawals will cease to qualify for BPR. IHT Planning Whilst many people may look at will writing as the first port of call for estate planning, this may only put off the day that IHT has to be paid. Your financial adviser may discuss other ways to mitigate IHT with you, including: Potentially Exempt Transfers (PETs) This usually involves gifting away wealth, with a resultant lack of control, but if you die within seven years, IHT will still be due. Trusts It also takes seven years for transfers into trust to be free of IHT and again they require investors to sacrifice control. There could also be a 20% up-front tax charge and transfers into most trusts are immediately chargeable to IHT. What s more, trusts are liable to IHT every 10 years and when certain payments are made out of the trust. Life insurance There are a range of life insurance options available for IHT planning. However these generally do not reduce the IHT payable; rather they simply provide a means of paying it. Investments qualifying for Business Property Relief (BPR) Shares in qualifying trading companies can attract 100% BPR provided they have been held for a minimum period of two years at the time of death. From that point qualifying shares become exempt from any IHT liability. TIME:Advance is a simple and effective solution to IHT using BPR. 4

5 Inheritance Tax Solution TIME:Advance The simple solution TIME:Advance offers you the opportunity to obtain 100% exemption from IHT after just two years, using BPR. TIME:Advance provides: A focus on capital preservation through a defensive investment strategy An uncapped target return of 3.5% per annum on the net amount invested after fees and costs Confidence inspired by the team s successful 19 year track record of achieving BPR for investors An annual management fee of 0.75% (plus VAT) per annum for the service, payable on exit and only if the target return is met Transparent investment philosophy and competitive fee structure The option of regular quarterly withdrawals Access to the experience, market knowledge and hands-on business expertise provided by the expert team at TIME The opportunity to encash all or part of your investment if you need to access your capital We aim to provide investors with access to asset backed businesses with strong risk management and a focus on capital preservation TIME has more than 500 million of assets under management. Stephen Daniels Head of Tax Products, TIME Investments 5

6 TIME:Advance Inheritance Tax Solution About TIME Investments We offer the longest track record of all BPR providers (19 years and counting) To date over 500 of our 2,000+ investors have successfully achieved BPR We have 500m in assets under management and growing We have an in house team of 12 investment specialists, offering a real depth of experience We pride ourselves on providing genuine transparency about where and what we invest in We currently have more than 50 staff and growing Independent oversight is built in to our services and provided by industry experts who ve chosen to align their reputations with ours We ve been profitable every year since inception, with the benefit of a strong balance sheet and robust structure Added security of an independent Custodian Your uninvested cash and investments made on your behalf will be held by an independent Custodian, authorised and regulated by the Financial Conduct Authority (FCA). 6

7 Inheritance Tax Solution TIME:Advance Key benefits TIME:Advance uses Business Property Relief to reduce investors IHT liability and offers a range of benefits: Speed 100% IHT relief is achieved after only two years, rather than the seven years required for trusts to become fully effective The two year period starts immediately your investment is processed and shares acquired Control You retain full ownership of and, if needed, access to your money Security We focus on investing in asset backed businesses, with no debt, which qualify for BPR Our emphasis is on capital preservation from our strong risk management disciplines Proven 19 year track record of TIME s management team s IHT services Your money and shares are held securely by an independent Custodian Attractive returns An uncapped target annual return of 3.5% on the net amount invested after fees and costs Alignment of interests Our Annual Management Charge is deferred until you exit the product and we ll only take it if we ve delivered the target return If you die before two years we ll waive some of our fees Flexibility Quarterly regular cash withdrawal option, for example, to supplement your pension Full withdrawal option, should your personal circumstances change Low minima: 25,000 initial investment, 10,000 top-ups, 5,000 lump sum withdrawals Simplicity No medical underwriting, no age limits and no complex trust arrangements 7

8 TIME:Advance Inheritance Tax Solution Risks Nothing in life is risk free. It is understanding those risks and how they affect you that is most important. You should speak to your Adviser regarding the suitability and risks of TIME:Advance, however, some of the key risks are outlined below. Investment performance Achieving the target return will depend on a wide range of factors whether relating to the wider economy or specifically to the sectors or individual businesses which TIME:Advance may invest into. There may also be limited diversification across sectors and assets. Past performance does not provide an accurate guide to future performance. Therefore there is no guarantee that the target return objectives of TIME:Advance will be achieved and you should recognise that your capital is at risk and you may not get back what you invest. Effect of withdrawals If you choose for your Adviser s fees to be paid from your portfolio, this will diminish your portfolio. Where the regular cash withdrawal option is selected and these exceed the actual return achieved in a particular period, this will similarly diminish your portfolio. Any withdrawals from the portfolio will also cease to qualify for BPR. Liquidity The underlying businesses are unquoted and therefore less liquid than quoted investments and whilst in the normal course it is expected that withdrawals may be made twice monthly, there is no guarantee that this will always be possible. You may be required to wait until sufficient cash is available from new subscriptions or realisation of assets for withdrawal to occur, particularly if a large number of simultaneous withdrawal requests are received. You should therefore treat your subscription as a long-term investment, particularly given the two year qualification period required to obtain BPR. Such underlying illiquidity may also affect intended withdrawals under the Regular Withdrawal Option. Valuation The Shares in which you will invest are unquoted, and there will be no secondary market in the Shares. Therefore Shares will be issued and sold or redeemed based on valuations (including of the underlying businesses) which will involve an element of subjectivity, and/or an element of time lag. You should recognise that the value of your shares can go down as well as up. Business Property Relief The rules and practice relating to BPR may change. BPR is agreed by HMRC on an individual basis and whilst TIME:Advance will invest in businesses which it reasonably believes to qualify for BPR, there is no guarantee that your estate will obtain 100% BPR on your subscription to TIME:Advance. It is also necessary for qualifying shares to have been held for a minimum of two years, as well as on death, and for the correct procedure to be followed and queries answered. Taxation The target return is based on current tax rates and practice and a change in the laws, regulations, rates and practice could also impact your post-tax return. The mechanism of any withdrawal, whether sale or redemption, could affect your tax treatment and in the case of a redemption may give rise to a liability to income tax. TIME does not provide taxation advice and you should seek professional advice before investing. Suitability It is your Adviser s responsibility to advise you on the initial and continued suitability of TIME:Advance for you. In common with all investments the suitability of any investment held through TIME:Advance may change, including if your personal circumstances change. 8

9 Inheritance Tax Solution TIME:Advance Flexibility We know everyone is different and that circumstances can change, that s why we provide different options when it comes to investing. You can select either: Growth Option or Regular Withdrawal Option Income earned will be retained within your portfolio and reflected in a higher portfolio value. This growth will be sheltered from IHT in the same manner as your initial investment. Regular cash withdrawals, paid quarterly in January, April, July and October, funded through the sale or redemption of shares within your portfolio. Investing with TIME We aim to invest your money within two weeks and the two year period, which is relevant for BPR, will start from the date at which shares are purchased. Once invested, we ll monitor your investments on your behalf and provide regular updates. You can also invest under a Power of Attorney your financial adviser will discuss this with you if relevant. Additional investments If you wish to increase your investment you may do so at any time through your Adviser. What happens if you die before two years? In order to qualify for BPR you need to hold your investment for at least two years and still hold it when you die. This means that if you die before reaching the two year milestone, your investment may not receive BPR and your estate may be liable to IHT. To help offset this we ve taken the decision that we ll waive some of our fees should an investor die within two years of investment. Please see page 13 for more details. Access to your money Should your needs change, you can request a withdrawal of your investment in whole or in part. Normally we would expect your investment to be realised and for you to receive your proceeds within a month of your instructions. We draw your attention to the liquidity risk explained in the Risks section on page 8, and you should also recognise that any withdrawals will no longer to be eligible for IHT relief. TIME:Advance targets returns of 3.5% per annum after fees and costs with 100% IHT relief. Simon Housden Sales and Marketing Director, TIME Investments 9

10 TIME:Advance Inheritance Tax Solution Investment strategy TIME:Advance focuses on investing in asset-backed businesses and targets a return of 3.5% per annum on the net amount invested after fees and costs. The investment team at TIME undertakes a rigorous review process for all potential investment opportunities. We ll only invest where we fully understand the opportunity and are confident we ve undertaken sufficient research. The team actively manages risk across the investment portfolio and, to avoid stock market volatility, we don t invest in quoted equities. Instead we target asset backed businesses, with no debt to deliver on our objective of capital preservation. TIME draws on over 200 years of collective experience in investing in asset-backed businesses including: Our current investment focus is on renewable energy and lending on secured assets. Solar energy Wind energy Secured property lending Self storage 10

11 Inheritance Tax Solution TIME:Advance Independent Advisory Committee The Advisory Committee has been set up specifically by TIME:Advance to advise the portfolio companies in which your money is invested. The Advisory Committee provides additional industry sector advice and, where relevant, additional advice on individual opportunities. Members are selected specifically for their strong knowledge of and track records in sectors in which we are likely to participate, and are independent of TIME. The Advisory Committee includes: Tim Jackson-Stops Fiona Stockwell Gareth Miller Martin Dack A chartered surveyor, Tim has over 40 years experience in the residential, agricultural and forestry markets, including 15 years as Chairman of Jackson- Stops and Staff, the national firm of estate agents. He is a director of four property development companies. Fiona has over 25 years experience in all aspects of financial services regulation relating to wealth management, covering a broad range of regulatory issues. Her career in the asset management industry includes 16 years at Merrill Lynch Investment Management. Currently she holds the role of Director of Legal, Compliance & Risk at Broadstone Pensions & Investments Ltd (formerly BDO Investment Management). Gareth has wide ranging experience in the renewable energy market covering senior roles in both the private and public sector. At Barclays plc for over a decade, Gareth led the bank s renewable energy project finance team and was responsible for the origination, structuring and execution of debt transactions for over 1 gigawatt of renewable energy generating assets in the UK and Western Europe. Gareth has also advised senior officials and ministers at the Department of Energy and Climate Change (DECC). Martin has over 45 years of experience in the banking and financial services sector, and has previously held the roles of Managing Director and Chairman of the Property Finance division of Close Brothers Group plc. Prior to joining Close Brothers Group plc, Martin held various roles at Midland Bank plc over a 25 year period. TIME is supported by a number of major professional advisers including Mazars LLP, a top 10 UK accounting firm who advise on BPR in relation to TIME:Advance activities. 11

12 TIME:Advance Inheritance Tax Solution How do we invest? TIME has a rigorous investment appraisal and approval process, which it applies to all investments on behalf of both institutional and private investors. Once your money is invested in a portfolio company, each trading opportunity is reviewed by the TIME Investment Committee. The Committee includes senior management from TIME and our parent company Alpha Real Capital, all of whom have wide-ranging hands-on investment experience. Nigel Ashfield Partner and Managing Director, TIME Investments Nigel is managing director of TIME Investments, which is the financial adviser facing arm of Alpha Real Capital. Nigel is also the fund manager of the tax efficient TIME:Freehold, a 230 million residential ground rent fund with a 22 year track record of inflation beating returns. Previously he was Managing Director of Close Brothers Tax Efficient Investments and Property Division where he worked for ten years. Stephen Daniels Partner and Head of Tax Products, TIME Investments Stephen has been managing the IHT services now run by TIME since 2007 and was responsible for the move into lower risk trades of secured property lending and renewable energy trades for TIME s IHT investors. A chartered certified accountant, Stephen began his career at Accenture before joining the specialist BPR investment team (with responsibility for IHT services) at Close Brothers as Assistant Director. Stan Lersch Director of Banking, TIME Investments Stan has 17 years real estate lending experience across the UK and Europe. Stan joined TIME s specialist lending team in Prior to joining TIME, Stan worked for Consensus Business Group for four years arranging and restructuring debt packages. Previously Stan worked for Mutual Finance Ltd, Barclays Bank, Bank of Ireland and Westdeutsche ImmobilienBank financing property assets in the UK and mainland Europe. Stan holds a Bachelor of Economics Degree from Warwick University and is an Associate of the Chartered Institute of Bankers. Phillip Rose Partner and Chief Executive Officer, Alpha Real Capital Phillip has over 30 years experience in the real estate, funds management and banking industries in Europe, the USA and Australasia. He has been the Head of Real Estate for ABN AMRO Bank, Chief Operating Officer of TrizecHahn Europe and Managing Director of Lend Lease Global Investment. Phillip is a member of the Management Committee for Hermes Property Unit Trust and was formerly a non-executive director of Great Portland Estates plc. Brad Bauman Partner and Funds Development Director, Alpha Real Capital Brad has over 20 years experience in the real estate and finance industries in both Europe and Australasia in Investment Banks, Property Companies and Institutions, including 7 years with CB Richard Ellis where he was Managing Director of CBRE Financial Services. Hugo James Partner, Alpha Real Capital Hugo has 20 years of financial services experience across investment banking, fixed income, insurance and principal finance as both principal and adviser. Prior to joining Alpha Real Capital, Hugo worked in pension de-risking across investments, liability hedging and bulk annuities. He was previously CEO of PensionsFirst Capital; a Managing Director at Credit Suisse; and Director responsible for sales and structuring of bulk annuities at Legal & General and a member of the annuities management team. 12

13 Inheritance Tax Solution TIME:Advance Fees It s important you understand the costs associated with investing in TIME:Advance. If you have any questions please speak to your Adviser or give us a call. Initial charges The initial charge payable to TIME is 2.5% (plus VAT) of your investment. Ongoing charges Dealing fees of 1% will be payable to TIME on investment and withdrawal. TIME will receive a deferred annual management fee of 0.75% (plus VAT) per annum of the value of your portfolio, payable only on exit or earlier transfer to a trust. To align our interests with yours, this fee will only be taken from the excess over the target return of 3.5% per annum on your investment (after the initial charge and dealing fee, and any initial Adviser fees). Adviser fees You may also have agreed an upfront fee payable to your Adviser which will be deducted from your investment and paid to your Adviser. You and your Adviser will agree any ongoing fees payable and these will be included on the Application Form. We will arrange for shares within your portfolio to be realised to pay these fees. Services costs TIME may provide administration, management, secretarial and other services to the Portfolio Companies and the underlying trading businesses in which they participate. This allows the Portfolio Companies access to the full range of TIME s skills and expertise, and avoids the need for these entities to employ their own staff and incur the substantial fixed overhead costs. The Portfolio Companies will pay TIME a fee for this service, which is currently capped at 1.5% (plus VAT) per annum. The target return of 3.5% per annum is calculated after these service costs, but before any ongoing fees payable to your Adviser. The Custodian s ongoing fees are payable by the portfolio companies. What happens if you die before two years? If you were to pass away within three months of investing in TIME:Advance, we will rebate our initial charge, waive our deferred annual management fee and our exit dealing fee. If you were to pass away after three months but before reaching the two year milestone, we will waive our deferred annual management fee and our exit dealing fee. 13

14 TIME:Advance Inheritance Tax Solution Time for action TIME:Advance isn t suitable for all investors, so it s important you receive professional advice. That s why we only accept investments through authorised financial advisers. Next steps The TIME:Advance Application Pack includes a Services Guide, Portfolio Management Agreement and Custody Agreement, which provide a detailed explanation of the product, as well as terms and conditions and an Application Form. You should complete the Application Form and return it to your Adviser together with a cheque for a minimum of 25,000. Alternatively you can transfer your money by electronic funds transfer. Full details of where to send your money are provided in the Application Form. Alice Storey Client Services Speak to your financial adviser for a copy of the application pack. What to expect from us We will acknowledge receipt of your Application Form and confirm when we have invested your subscription. Your money and shares will be held on your behalf by an independent Custodian, which is authorised and regulated by the FCA. If you have elected for the Regular Withdrawal Option, quarterly payments are normally made in January, April, July and October. If you want to make a withdrawal or increase your investment, you should speak to your Adviser. You should maintain your relationship with your Adviser, so that they are able to advise you on the continued suitability for you of investments made through TIME:Advance. TIME does not provide taxation advice and you should seek professional advice before investing. Personal capital gains and/or income tax may be payable depending upon your circumstances and whether your shares are sold or redeemed, as described further in the Services Guide. 14 You should read the whole of the Application Pack to fully understand the risks involved and, together with your Adviser, decide whether TIME:Advance is suitable for you. Once invested, you ll have access to our secure online portal, where you can view valuations and other correspondence from us. If you have any questions please call one of the team on

15 Inheritance Tax Solution TIME:Advance Contact TIME Investments time-investments.com

16 Important information This Brochure should be read together with the Services Guide, Application Form, Portfolio Management Agreement, Custody Agreement and Glossary, which together describe and set out the terms of the TIME:Advance discretionary management service (together, the Application Pack). The Application Pack constitutes a financial promotion pursuant to section 21 of the Financial Services and Markets Act 2000 and is issued by TIME Investments ( TIME ). TIME is the trading name of Alpha Real Property Investment Advisers LLP, a limited liability partnership registered in England under number OC with its registered office at 338 Euston Road, London NW1 3BG. TIME is authorised and regulated by the Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS, under FCA number TIME has approved the Application Pack as a financial promotion for distribution to investors who have been advised on suitability by an authorised financial intermediary (an Adviser ). Subscription to TIME:Advance is only available through Advisers. Your Adviser is responsible for advising on the suitability of TIME:Advance in light of your personal circumstances and acting as your agent in respect of the TIME:Advance service. All information correct as at November TA TIME Investments 338 Euston Road London NW1 3BG Tel: Fax: questions@time-investments.com Web: time-investments.com