AIM continues to be the market of choice and the envy of growth markets around the world. It has comfortably outperformed London’s main market in all key areas during the Covid-19 crisis so far, one of the worst periods of economic uncertainty and downturn in our economic history. But where has its success derived?

The make-up of AIM has changed since it began back in 1995 when it was considered the wild west of investment markets. Today is a very different picture. AIM now has many businesses valued at over £1billion! Making up a significant share of the market’s overall capitalisation and a key driver of AIM’s overall return.

The two largest companies on AIM are ASOS and Boohoo and well-known online retailers. AIM has many highly profitable companies but at the other end of the spectrum it has some with no revenue or earnings to speak of. However, these are not laggards but some of the most exciting prospects for future growth covering sectors including hydrogen fuel cells and early-stage pharma.

AIM has become more of a rounded market, with many well-established businesses (some over 100 years old). But it is also a marketplace for many innovative and fast-moving business. AIM has a large exposure to some of the economy’s best-performing sectors, such as technology.

Interested in hearing more? Join us on Tuesday 29th June at 2pm for our session Is AIM heading for a fall…or is its outperformance set to continue?

The improving quality of companies on AIM, combined with the Individual Savings Account (ISA) rule changes from August 2013 which allowed AIM shares to be held within ISAs, has seen a growing number of investors consider AIM for both its investment and tax planning attractions. The ability to invest in inheritance tax (IHT) qualifying portfolios through many leading wrap platforms now makes it even easier for clients and advisers.

AIM is no longer the high-risk market of former times, where speculative resource stocks and unknown international companies proliferated. It is now home to a large number of well-managed, profitable, dividend yielding UK based business.

As the market has improved it has also become much easier for investors to buy and sell AIM shares and for advisers to offer access to these exciting companies to their clients, many of which come with attractive inheritance tax planning benefits.

The purchase and sale of AIM quoted securities often used to be the preserve of specialist brokers but AIM IHT Portfolios can now be accessed through leading wrap platforms. This means that, in allocating money to a specialist manager, advisers are not forced to direct money off platform, which can cause unnecessary monitoring and administrative burdens, not to mention a fear of the unknown. Advisers can keep everything in one place maintaining the same pricing structure.

Investing via platforms can also expedite investment without the need to complete lots of paperwork, which is particularly important for AIM for inheritance tax planning purposes with the short, two-year, qualifying period a key attraction.

Fundamental AIM IHT Portfolios can currently be accessed on the Transact, Elevate, SL Wrap, Funds Network, Ascentric and Nucleus platforms.

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

To hear the many other ways BPR qualifying assets can help your clients’ Inheritance Tax planning watch our session How can AIM help you and your clients?

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 17 years, from the link here.

Enjoy your weekend,

The Fundamental Asset Team

Shares in a business which qualify for Business Property Relief (BPR) can benefit from 100% Inheritance Tax mitigation if held for two years and until death.

Many businesses in the UK qualify for this relief and many businesses rely on this exemption to pass their family-owned business down to children or other beneficiaries, free of Inheritance Tax. If that business were to instead be sold, then the proceeds of that sale would lose that exemption.

It may be the case that a business owner does not have any children, or anyone else they would like to leave the business to, and so selling might be the favoured option.

A BPR qualifying asset can be sold and reinvested into another BPR qualifying asset/s within 3 years of that sale, retaining the BPR status immediately and without re-setting the 2-year clock needed to obtain the exemption. Importantly, during those 3 years, or a period up to those 3 years, the proceeds while not invested in a BPR qualifying asset will not be exempt.

Consider a quick example

John is a widower whose health has recently deteriorated. He sold his business two years ago for £3 million. He has decided to use half of the proceeds to fund his retirement and would like to leave the rest to his two sons. He is aware that this will incur a significant Inheritance Tax bill on his death and is looking at ways to reduce this.

Some more traditional forms of estate planning such as gifts and trusts may not be suitable because they will take seven years before becoming free from Inheritance Tax and this may be unrealistic given John’s poor health.

John’s financial adviser explains to him that the shares in his business qualified for BPR which means he could have left them to his sons free from Inheritance Tax. However, he chose to sell the business and so in the current situation those proceeds will be subject to Inheritance Tax due to the size of his estate.

What is the solution?

John’s adviser suggests he invests the proceeds of the sale of his business into an AIM portfolio service. As John only sold the business 2 years ago he is within the 3 year window where he can re-invest the proceeds into a BPR qualifying asset/s for immediate Inheritance Tax mitigation, without the need to hold the assets for another 2 years.

AIM is one of the world’s most successful growth markets. To hear more about the success of AIM as a growth market watch our session Another record-breaking year for AIM but what for 2021?

A further benefit is that the investment will remain in John’s name and so he will be able to make withdrawals should he need the funds for something in the future.

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

To hear the many other ways BPR qualifying assets can help your clients’ Inheritance Tax planning watch our session How can AIM help you and your clients?

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 17 years, from the link here.