Investors flock to AIM for Inheritance Tax planning

Silhouettes flock of seagulls over the Ocean. Black-and-white photo.

According to The Openwork Partnership, one of the UK’s largest networks of financial advisers, there was a 38% spike in demand for advice on Inheritance Tax (IHT) planning in the past year, with more than one in ten clients wanting to discuss it. This demand is set to increase significantly with latest data from HMRC showing IHT receipts for April to July 2021 of £2.1billion, £500million higher than the same period a year earlier. This is good news for the UK government which is looking at ways of paying for a generous furlough scheme and other Covid-19 support measures. It is however bad news for those looking to reduce IHT, as any increase in IHT tax receipts for the government has a knock-on effect of reducing the amount of assets left to loved ones.

In the Spring Budget, the Chancellor of the Exchequer, Rishi Sunak, announced that the Lifetime Pension Allowance (LPA), nil-rate band (NRB) and residential nil-rate band (RNRB) will be frozen until April 2026. This means the LPA will remain at £1.0731m, the NRB at £325,000 and the RNRB at £175,000 during this time.

In practice, more and more people will find themselves with an IHT issue as asset prices rise with inflation, but IHT allowances remain fixed. House prices alone saw a 2.1% month-on-month increase in August, the second biggest gain in 15 years. This is a key factor helping to explain the sudden popularity of IHT planning by clients and the increase in use of IHT efficient investment products.

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.

The Office for Budget Responsibility (OBR) is predicting that the next two years may see a slight decline in IHT receipts, due to the effects of the pandemic. That said, they expect the changes made in the budget will see the Government collect an extra £450 million pounds in IHT by 2025/26.

To encourage investors to support smaller growth businesses, the government offers a tax relief called Business Relief (BR). Many companies can qualify for this tax relief, including many companies listed on AIM. Once shares in qualifying companies have been owned for a minimum of two years and until the point of death, the shares are free from IHT. Furthermore, since 2013, AIM shares can be held in an ISA which means that investors can enjoy tax free growth and income on any gains made. This means that investors holding BR-qualifying AIM shares within an ISA can create a tax-efficient investment with no Income Tax, Capital Gains Tax or Inheritance Tax.

Want to hear more? Join us at 2pm on Wednesday 15th September for our upcoming CPD Adviser webinar session- How can AIM help your clients’ Inheritance Tax planning?  


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.