Octopus halts business relief withdrawals over valuation concerns
The Octopus Inheritance Tax Service (OITS) has temporarily halted withdrawals and new investments, raising questions about liquidity and valuation in business relief (BR) schemes. The suspension, announced in July, stems from uncertainty over the valuation of Fern Trading, the unquoted company at the heart of the service. With assets worth over £3.4 billion—spanning renewable energy, property, and fibre infrastructure—Fern’s shares lack a public market price, forcing Octopus to pause transactions while assessing a potential deal that could materially affect its value.
On July 9, Octopus informed advisers it was temporarily stopping withdrawals for about one week due to Fern’s involvement in a proposed acquisition: PlatformX Communications, TalkTalk’s wholesale fibre business. Without clarity on the deal’s impact, Octopus said it couldn’t confidently set a fair price for Fern shares. The pause was later extended by six to eight weeks, leaving investors unable to access their capital.
The move was described as “prudent” by financial planner Robin Melley, who argued that halting transactions prevented unfair pricing. Yet the consequences for clients are immediate. A 78-year-old who chose BR to retain access to funds—only to face unexpected care costs—now holds an investment they can’t liquidate. Octopus states withdrawals are “typically processed within one month”, but the suspension shows the risks of unquoted assets.
Sam Patterson, head of proposition at Equilibrium Financial Planning, says advisers should “100% assume” BR investments could become temporarily illiquid. He advises clients to hold sufficient liquid assets elsewhere and stress-test cash flow needs. “These products are designed to be held until death,” Octopus notes, framing BR as a long-term tax relief tool rather than a liquidity source.
Why Advisers Now Question Business Relief Trusts
Diversification and due diligence are now under scrutiny. Advisers grapple with how to assess a company as complex as Fern, which owns hundreds of private assets. Patterson emphasizes that provider selection must be rigorous and regularly reassessed—not just based on size or reputation. The suspension provides a clear example of what can happen when an investment in unquoted businesses encounters uncertainty over valuation. “Just because a BR provider is the preferred one now doesn’t mean it will be in the future,” he says. The episode highlights how easily valuation uncertainties can disrupt even established schemes.
Octopus’s decision came after major advice firms, including Openwork and St James’s Place—had already stopped recommending OITS, though not directly due to the suspension. An industry insider described the episode as making advisers more wary of BR schemes, noting it would be “imprudent of them not to be”. The question for advisers now is whether they can justify the risks of BR to clients, especially as inheritance tax changes loom next April, without compromising on diversification, liquidity, or transparency.
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Acquisition Deal Complicates Fern’s Valuation Crisis
Fern Trading’s proposed acquisition of PlatformX Communications adds another layer of complexity to the valuation challenge. The deal, involving TalkTalk’s wholesale fibre business, introduces potential synergies between Fern’s existing fibre infrastructure and PlatformX’s operations. The absence of a public market price means any adjustment to Fern’s worth must be estimated internally, relying on quarterly asset reviews and monthly share-price assessments. This process, while standard for unquoted companies, becomes particularly sensitive when a major transaction looms, as it did in July.
The suspension has also exposed gaps in how advisers assess the risks of business relief investments. While providers like Octopus emphasize that BR schemes are long-term tools, designed to be held until death, clients often choose them precisely because they expect to retain access to capital. The contradiction between Octopus’s stated design and real-world liquidity needs has left some advisers questioning whether the service aligns with client expectations.
Patterson notes that the episode shows the need for advisers to treat BR allocations with the same scrutiny as any other investment. “Everything we talk about in financial advice is about diversification,” he says. “Responsible planners need to treat BR in the same way as an asset allocation.” Simply using more than one provider does not necessarily provide diversification if the underlying exposures are similar.
Octopus Struggles to Reassure Investors
For Octopus, the immediate priority is restoring confidence in OITS. The firm has maintained that withdrawals are typically processed within a month, though the current pause, now extended beyond the initial week, has tested that claim. An Octopus spokesperson reiterated that accessibility is a key selling point of BR, but also stressed that unquoted investments carry inherent risks. “The ability to withdraw isn’t guaranteed,” the statement noted, adding that clients should view BR primarily as a tax-efficient, long-term holding rather than a liquid asset. Yet the suspension has already prompted some advisers to advise clients against relying on OITS as a flexible source of capital, particularly for those with pressing liquidity needs.
The broader impact on the BR market remains to be seen. While the OITS pause does not signal systemic failure, it serves as a cautionary example for advisers handling unquoted investments. Major firms like Openwork and St James’s Place had already scaled back recommendations for OITS before July, though not directly due to the suspension.
