AIM shares can help cut your Inheritance Tax bill
Business Property Relief (BPR) is a valuable tool which can be used to help you reduce your Inheritance Tax bill.
In a nutshell, if you hold a BPR qualifying asset for two years and until death then that asset will be exempt when calculating how much of your estate will be liable to Inheritance Tax on your death.
Unquoted shares in a company fall within the remit of BPR. And crucially, the term “unquoted” has a broad definition which includes companies listed on AIM, the junior market of the London Stock Exchange.
As such, qualifying AIM shares will not count as part of your estate for Inheritance Tax purposes and none will be due on those assets, even if your estate exceeds the threshold at which your heirs would normally have to pay 40% tax.
You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.
One of the golden rules of financial planning is never to “let the tax tail wag the investment dog”. This is true in the case of AIM shares which should not be bought just for the tax break. Although the tax benefits are significant, AIM shares should be bought first and foremost for their investment potential. The good news is that AIM is one of the most successful growth markets in the world. However, it should be considered a high-risk investment.
Interested in hearing more about AIM as one of the world’s most successful growth markets? Then why not watch our webinar session to hear more: Is AIM heading for a fall… or is its outperformance set to continue.
It is possible for investors to build and manage their own portfolio of AIM investments. However, such an investor will need to be confident in their ability to choose investments wisely, qualify those investments up until the point of their death for BPR qualification, manage their own administration when buying stocks directly and stay on top of any changes to the applicable tax rules.
The alternative is to work with an investment manager specialising in building tax-efficient investment portfolios. AIM shares as part of a well-diversified and professionally managed investment portfolio carefully structured according to your attitude to risk and your financial goals can be a useful way to plan for inheritance tax. AIM shares can also be included in an ISA where investors will benefit further from tax-free income and capital gains on growth.
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.
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.
AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.