Effective estate planning requires creative thinking, specialist knowledge, and a thorough understanding of each client's unique financial position. P10 Financial Group are experts at structuring mortgage solutions that go beyond simple property purchases — this is how we helped a highly successful business owner unlock capital from an unencumbered property to reduce a future inheritance tax liability for their family.
The Challenge: Estate Planning With a Complex Affordability Profile
Our client owns a highly successful business with an annual turnover in excess of £20 million with a sizable profit. Despite this, like many business owners, they chose to draw a modest personal income to service their lifestyle — a tax-efficient approach but one that immediately creates challenges when applying for mortgage finance.
The objective was clear: remortgage their fully unencumbered property, valued to raise £1,500,000 in capital. This capital would then be gifted to their children — a well-established estate planning strategy that, subject to the seven-year rule, progressively removes the gifted sum from the client's estate, reducing the future inheritance tax (IHT) liability on their death.
The challenge was presenting affordability in a way that specialist lenders would accept — without relying on personal drawings alone.
The Solution: Using Net Business Profits to Demonstrate Affordability
Rather than relying on personal salary and dividends — which would have severely limited the available mortgage — our team structured the application around the net profits of the client's business. This is a well-recognised approach among lenders who understand the financial reality of owner-managed businesses, but it requires careful presentation and the right lender relationships.
We worked closely with the client to compile a comprehensive financial picture, drawing on business accounts and net profit figures to demonstrate clear and sustainable affordability. The result was a product that met every objective:
• A 2-year fixed rate at 3.74%
• Interest-only repayment structure, minimising monthly outgoings
• £1,500,000 capital raised
• Affordability assessed on net business profits, not personal drawings
The Result: £1.5m Gifted, IHT Liability Progressively Reduced
With the funds successfully raised, our client was able to gift £1,500,000 to their children. Under HMRC's seven-year rule, provided the client survives seven years from the date of each gift, the full amount will fall outside of their estate — meaning no IHT will be payable on it. Even within the seven-year window, taper relief reduces the effective IHT charge over time.
The interest-only mortgage structure was the ideal vehicle for this strategy. By keeping monthly repayments to a minimum, the client could service the mortgage comfortably from whilst keeping personal drawings from the business to a minimum, while their children benefited from the capital. This strategy doesn’t only make sense from a tax perspective, but also allows our client the joy of helping their children, which let’s be honest is a large reason we all work so hard.
Leverage: 45%
Capital Raised: £1,500,000
Mortgage Type: Interest Only
Rate: 3.74% - 2 year fixed
Affordability Basis: Net Business Profits
The P10 Financial Group Difference
At P10 Financial Group, we specialise in delivering solutions as unique as the individuals we serve. In this case, we turned what many high street brokers would have struggled to place into a clean, well-structured outcome that served both the client's immediate financial objectives and their longer-term estate planning goals.
If you are a business owner or high-net-worth individual facing complex mortgage requirements — whether for property purchase, remortgage, or wealth planning — P10 Financial Group is here to help. We specialise in crafting bespoke financial strategies that align with both your personal and professional goals. Our mission is to clear the path so you can focus on what truly matters.
