Frequently Asked Questions
What happens to my investment when I die?
On receipt of a death certificate, your investments will be transferred into the name(s) of your personal representative(s) and we will await their instruction as to how the investment is to be administered. Beneficiaries can claim business relief on your investment if the shares have been held for at least 2 years at death.
What happens if I do not survive the two-year minimum period of ownership?
In these circumstances, an investment in shares will not qualify for BR and your investment will likely be subject to IHT, but it may be possible to pay the resultant IHT liability in a series of instalments.
Can I invest in joint names?
Yes, ZEPS is available to joint applicants
Can I transfer my investment to someone else during my lifetime?
Yes, we can arrange for your investment to be transferred during your lifetime. In some instances the transfer may give rise to a capital gains tax liability.
When does the two-year BR minimum period of ownership start?
The two year period typically commences when your subscription is invested into the shares of the Direct Lending Companies, although this is ultimately determined by HMRC. It will typically take up to one month to invest your subscription (but could take longer).
Can I transfer my investment into a trust?
Yes, your investment may be transferred to an existing trust, subject to the receipt of the necessary paperwork.
Should I update my will?
It is not necessary to update your will but depending on your circumstances there may be some benefits in doing so. Please consult with your financial adviser.
Do I need to be actively involved in the companies held in my portfolio?
No. There is no requirement to participate in the running of the business in order to qualify for 100% IHT relief.
Is qualification for BR guaranteed?
We make every effort, including consultation with professional advisers, to ensure that the entirety of your investment in shares will qualify for BR. However, BR qualification is ultimately determined by HMRC after your death. As such we cannot offer a guarantee of qualification.
What happens to my money when it is waiting to be invested into companies
During this time your money is held in a personal segregated client account in your name with the custodian appointed by the ZEPS DFM. No interest will be paid on client money balances whilst they are pending investment into ZEPS.
Can ZEPS facilitate the payment of advice fees to my IFA?
The ZEPS DFM is able to facilitate the payment of an initial Financial Advisor fee, which, along with a product-related “Initial Fee” of 1.0%, is deducted from the gross investment amount, creating a “Net Subscription” amount eligible for investment in BR qualifying shares. Inheritance tax (IHT) relief applies only to this Net Subscription amount. Any ongoing Financial Advisor fees will be paid quarterly from the sale of shares. Note that if your advisor charges VAT, we cannot cover the VAT element and you will remain responsible for this.
Is ZEPS a Fund?
ZEPS is not a fund or a legal entity, but a discretionary investment management service. It is not considered to be a collective investment scheme (as defined in section 235 of the Financial Services and Markets Act 2000) or a collective investment undertaking under European legislation.
Can I change my mind after I have invested?
You can write to us within 14 days to cancel your investment. However, if we have already subscribed for any shares for your portfolio at that point, you will not be able to obtain a refund for them. However, you can request that your shares are sold. See the Investment Management Agreement for full details.
Is my investment covered by the Financial Services Compensation Scheme ("FSCS")?
Two types of FSCS protection are relevant to investors: Deposits and Investments.
Deposit protection applies when money belonging to investors is held in the client account. This occurs initially when investor money is transferred to the ZEPS Administrator to make an investment and when interest repayments or dividends and repayments of capital are being held on behalf of investors. While the money is in a client account (which is likely to be a short period) it is protected by the FSCS deposit protection which is currently £85,000 per person per eligible claim. This client account is operated by Woodside Corporate Services Limited, the initial custodian appointed by the ZEPS DFM under the direction of the ZEPS DFM and is held with the Royal Bank of Scotland. Investors may also be entitled to investment protection in cases where loss is incurred by factors such as investments in ZEPS being mis-sold or misrepresented. The FSCS investment protection is currently up to £85,000 per person per eligible claim.
The shares issued by Direct Lending Companies are not protected by the FSCS. Accordingly, neither the FSCS nor anyone else will pay an investor compensation upon the failure of a Direct Lending Company. If a Direct Lending Company goes out of business or becomes insolvent, you may lose all or part of your investment. Individuals approaching retirement and considering options under the new pension freedoms should recognise that an investment in the shares of a Direct Lending Company is a much higher-risk alternative to buying an annuity.
Individuals in retirement, who may have significant sums in savings and may be concerned about low interest rates and are tempted to invest may be taking an inappropriate level of risk with their money. It should be noted that an investment in ZEPS should be made in the context of wider portfolio of investments with sufficient assets in readily realisable investments to cover any anticipated liabilities. If you remain in doubt whether an investment is appropriate for you, you should contact your IFA.