Onside Issue 1 - Spring/Summer 2014 - 6

ONSIDE / QUESTIONS AND ANSWERS

SITS down next to me...
Seneca's Ian Battersby, explains the rapidly growing popularity
of Seneca's Inheritance Tax Service to Michael Taylor

eneca's Inheritance Tax Service
is an attractive way to provide
for beneficiaries without losing
ownership of assets. With the
complexity surrounding Trusts and
the 7 year qualification of Lifetime
Giving, using Seneca's IHT Service
allows full ownership to be retained
and the potential to obtain 100%
relief from IHT after only two years...
Seneca's Ian Battersby, explains the
rapidly growing popularity of this
solution to Michael Taylor.

How does Inheritance Tax
legislation work as it stands?
The IHT rate stands at 40% of any
wealth accumulated over a threshold
of £325,000. The cost and complexity
of mitigating IHT with current options
is not always palatable. Critically,
the majority involve passing away
ownership forever, which is not always
ideal. Under the Seneca Inheritance
Tax Service (SITS) complete ownership
stays in the hands of investors, is
liquid to the extent that investors can

withdraw subject to a notice period
and capital is fully secured. Seneca also
aim for capital growth of 4% per
annum net. After only 2 years, the
investment should be free of liability to
the 40% IHT charge.

So how does it work?
The service relies on well-established
tax legislation relating to Business
Property Relief (BPR) and invests in
shares in Seneca Secured Lending
Ltd (SSL) whose trading status is the
provision of short and medium term
secured loans. After being owned
for 2 years, these shares will qualify
for BPR and 100% relief from IHT.
Typically, loans provided by SSL will be
secured on property, company assets
and/or personal assets, always with a
very prudent margin.
SSL is based on preservation of
capital rather than seeking excessive
investment return and so the quality
of security in support of the lending
is paramount.

Does Seneca's expertise across
various investment classes attract
incoming investors?
Yes of course. We already have a BPR
qualifying loan book approaching
£15 million and our day to day
activities across the Seneca Group
make us ideally placed to source and
execute deals of the requisite quality.
As always with these things, investors
are backing the quality of our Credit
Committee. This comprises 6 of our
team all of whom have wide
backgrounds in a variety of credit
disciplines including senior debt,
mezzanine, leveraged- finance,
asset based lending, debtor finance
and property. Additionally, Seneca
Banking is engaged on the advisory
side of complex debt deals and equally
complex hedging instruments and
derivatives. So I would emphasise one
of our core strengths is in multi asset
lending run by a very senior and
experienced team.

So what can investors expect
from the service?
Well, the aim is to mitigate IHT whilst
preserving capital. It isn't intended to
pursue a strategy of high investment
return as this would conflict with the
requirement to preserve capital. We
expect to grow capital value at 4% per
annum net of costs and corporation
tax, so hopefully ahead of inflation in
order that value does not erode over time.

Ian Battersby is Seneca's Director responsible for Intermediaries, Wealth Managers and HNW client relationships.
If you wish to learn more about what SITS has to offer then please email ian.battersby@senecapartners.co.uk
or directly by telephone 07799 777 882

Table of Contents for the Digital Edition of Onside Issue 1 - Spring/Summer 2014