Summary of Deepbridge Protect
Deepbridge Protect is an IHT mitigation service that seeks to help businesses obtain full IHT relief, through their membership of a trading Partnership participating in a qualifying trade, so as to qualify for Business Relief.
Potential investors are offered the opportunity to become a Member of a Limited Liability Partnership (the ‘LLP’) a trading partnership resident in the UK that offers corporate entities the opportunity to provide essential short-term secured lending to social housing developers.
The LLP targets a pre-tax target return of 5% per annum (depending on the timing of the Member’s exit). UK corporate entities may benefit from 100% Business Property Relief (BPR), which removes the investment from their Estate for Inheritance Tax purposes after a holding period of two years.
The Applicant will retain direct control of its proportion in the Partnership, with full control over their participation.
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The trading activity of the Partnership is the lending of short-term capital to social housing developers, located within the United Kingdom.
Providing development capital to social housing providers enables these organisations to expedite the development of this housing segment. This enables relevant housing associations and local authorities to quickly and efficiently reach a developmental stage at which more traditional longer-term financing can be secured. Since 2020, developers no longer require a normal planning application to demolish and rebuild vacant and redundant buildings, in England and Wales, if they are rebuilt as homes.
Short-term secured lending is a sector that has experienced significant growth in recent years, and which continues to project positive growth trends. It is our understanding that the short-term secured loan market is highly fragmented and competitive, with different areas of focus providing differentiation between lenders. Many businesses turn to short-term lenders to provide them with finance, driven by an apparent lack of competitively priced longer-term commercial lending by traditional high street banks. Consequently, businesses of all types, particularly property developers, now use short-term secured lending as a rapid source of additional borrowing, to fund business acquisition or expansion, or take advantage of other investment opportunities.
Business Relief (formerly Business Property Relief) is an established form of tax relief that gives people an incentive to invest their money into trading businesses. It was introduced in 1976 as a way to ensure that Inheritance Tax wasn’t paid on small businesses.
Shares in a Business Relief qualifying business can be left to beneficiaries free from Inheritance Tax, provided they have been owned for at least two years at the time of death. You can read more about Business Relief on the HM Revenue & Customs (HMRC) website at hmrc.gov.uk. To find the relevant pages, just type ‘Business Relief’ in the search box.
Deepbridge Protect has been established with the express intention of assisting business owners to utilise surplus cash balances to generate a competitive return while also mitigating the potential for inheritance tax, by converting ‘Excepted Assets’ into ‘Relevant Business Property’.
This is a complex area for many companies to address, particularly as each company is unique in its circumstances and its business activities. Many companies are unaware of the ‘Excepted Asset’ exclusion which the HMRC may seek to apply when cash held by the company is deemed surplus to its normal trading requirements.
If it is not possible to extract cash from your company in a tax efficient manner, and this cash remains surplus to your company’s trading requirements, then participating in Deepbridge Protect may solve this issue, subject to specific tax advice which any potential subscriber to Deepbridge Protect should seek.
Social Housing Development Bridging Finance
5% per annum
Deepbridge will invoice the Partnership for a sum to the value of 1.5% of Member’s initial contribution to cover the costs of your joining the Partnership.
Annual management charge
Deepbridge will charge an annual management charge of 1% plus VAT which will be borne by the Partnership.
On annual returns in excess of the target 5%, Deepbridge will charge a performance fee equal to 20% of any increase
Deepbridge may levy additional management and operating costs to the Partnership, associated with the trading activity of the Partnership. Any fees will be disclosed to Members.
See the Information Memorandum for full details of fees.
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