What to Look for in an Inheritance Tax Solution: Three Questions Worth Asking

For professional advisers

Business Relief-qualifying investments have become a core part of many estate planning conversations, particularly as more clients look to mitigate an increasingly costly inheritance tax bill. But not all BR-qualifying structures are built the same way, and the differences matter, for your clients, and for your own due diligence file.

Here are three questions we think are worth asking of any BR-qualifying Inheritance Tax Service, including our own.

1. Where does the risk actually sit?

Some BR structures hold investor capital in one or two underlying companies. On paper that can look concentrated, and it’s a fair question to ask. What matters in practice is whether risk is genuinely spread underneath that structure, or whether it all rides on a single asset.

The Calculus ITS invests via Alchemy and Alchemy Plus, which provide secured loans to finance individual film and TV productions. Rather than one company owning one asset, each fund holds a diversified book of loans across separate productions, producers and broadcasters, with each loan secured against its own collateral such as a commissioning contract, a tax credit, a pre-sale agreement, or a combination. To mitigate the risk of a production not being delivered completion bonds are typically in place. This transfers the risk of a production overrunning or failing to complete to the bond provider, rather than leaving that risk sitting with the loan.

There’s a second layer of diversification worth pointing out too. Most BR solutions on the market concentrate client exposure in a fairly narrow set of sectors, SME lending, renewable energy, fibre infrastructure and property. Calculus ITS sits in film and TV production finance instead, a genuinely different sector with its own demand drivers and low correlation to the sectors most other BR products already have clients exposed to. For a client with existing BR holdings elsewhere, that’s real diversification at the portfolio level, not just within one product.

2. How is the investment valued, and against what?

This is a very important question. Illiquid, unlisted equity must be valued by someone, and where a manager selects the assets and marks them with limited external reference points, that’s a fair thing for an adviser to press on.

Calculus ITS isn’t unlisted equity valued on a model. The underlying loans are secured against contracted, verifiable cashflows, broadcaster or streamer commissioning contracts, production tax credits (backed by an independent auditor’s opinion letter on expected value and timing), and pre-sale agreements. The starting point for value, in other words, is a contract or a tax credit certificate, not a manager’s internal mark.

3. What does the liquidity mechanism actually do?

BR-qualifying investments in unquoted companies are illiquid by nature. The honest question is how the manager handles withdrawals in practice, and whether that’s reliant on new money coming in or something more structural.

Calculus ITS has a degree of natural liquidity built into the loan book itself. Loans typically run 12 to 20 months, so the portfolio is constantly maturing and repaying on a rolling basis, freeing up cash rather than everything being locked into long-dated, illiquid positions. That sits alongside a matched bargain facility, which targets meeting withdrawal requests by matching outgoing investors against incoming subscriptions. The short-dated nature of the underlying loans gives it a different liquidity profile to BR solutions built on long-term illiquid stakes. We’re happy to talk through how it’s performed in practice.

We’d welcome the chance to talk through the structure in more detail, including the Information Memorandum and underlying transaction examples, please get in touch.