The Business Partnership will purchase carefully selected farm businesses, including associated farm assets such as land, outbuildings, and stock.
The purchase releases capital to the incumbent farmer who will normally be engaged to help work the farm with the partnership for a period of three years at which point the farm is either purchased back by the original farmer, or the farm will be kept, or sold, by the partnership.
Each quarter the Partnership will aim to distribute income at a targeted annualised rate of 4%. The partnership will also distribute any capital gains arising from the sale of a farm.
The partnership has been designed such that participants will benefit from business property relief which mitigates inheritance tax on a gift of a partnership share after the participation has been held for two years or more.
Entrepreneurs' relief may also be available if the participation has been held for the required period. Investors in the exempt unit trust should instead not be liable for tax on any accrued chargeable gains on the disposal of any farm by the partnership.
Alistair Mawdsley, Director of Connaught, commented:
“We are delighted to be launching The Business Partnership and to be extending our products further into the alternative assets arena.
"Our core supporters asked us to design an opportunity which also has the potential to mitigate IHT and after 18 months of research and development believe that we have created a very attractive proposition for this market.
“We have now received clearance from HMRC regarding the suitability of The Business Partnership for IHT relief and felt that with uncertainty creeping back into some investment areas we would bring forward the launch of the partnership to July from September.”
The Business Partnership is set up as a limited partnership with an independent operator and administrator. The limited partnership will have an attendant exempt unit trust for those entities unable to participate in limited partnerships.
