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AIM Portfolio IHT Plan

Protecting your clients’ money from inheritance tax

Planning for Inheritance Tax (IHT) is a concern for many. Trusts are an option but can prove expensive, inflexible and time consuming. This is why we have developed the AIM Portfolio IHT Plan - a vehicle that helps financial advisers to help their clients reduce their potential IHT liability after only two years.

How it works is simple: under current tax rules, unlimited exemption from IHT is available to private individuals provided that an investor has held shares in a qualifying company for at least two years. Most companies trading on the Alternative Investment Market (AIM) are eligible for Business Property Relief (BPR). As such, the shares contained in the portfolio are classed as business assets and therefore exempt from Inheritance Tax.

There are risks, of course, as there are with any longer-term investments, but we have a close working knowledge of AIM companies and are strict in choosing where we invest - selecting only those with a strong management team and proven track record - and in monitoring their subsequent performance.

Example of possible savings

  With Portfolio IHT Plan Without Portfolio IHT Plan
Value of equity portfolio £500,000 £600,000
Value of AIM portfolio £100,000 -
Less: IHT@ 40%
Initial costs
(£200,000)
(£2,000)
(£240,000)
Net value of portfolio £398,000 £360,000

Fig 1. Initial costs in the above table excludes any commission paid to an Independent Financial Adviser (lFA).

In this example, as the £100,000 AIM shares are excluded from IHT liability, the AIM Portfolio IHT Plan would have increased the value of the estate by £38,000 or 10.6% of the net value of the portfolio.

Please note that IHT tax legislation is subject to change, though rarely retrospectively, and the value of IHT savings depends on the circumstances of the investor. However, BPR remains well established following many years of government changes.

Find out more

If you’d like to know more about the AIM Portfolio IHT Plan please complete our Contact Form.

The Risks of AIM Portfolio IHT Plan

Remember the AIM Portfolio IHT Plan is a higher risk, long-term investment. AIM has less stringent rules and AIM company shares may be less liquid than those for companies listed on the London Stock Exchange.