We are always seeking solutions for our clients and looking to provide products that will help them manage their assets more efficiently, with the aim of protecting and growing their wealth for the future.

Preparing for Inheritance Tax (IHT) is an area that regularly impacts on our clients’ financial and legal planning. Across HWM, depending on clients’ individual circumstances, we can offer a number of ways to tackle and mitigate the impact of Inheritance Tax, to help reduce its capacity to erode your family’s wealth.

WHAT IS AIM?

AIM – or the Alternative Investment Market to give it its full name – is a sub-market of the London Stock Exchange. It allows smaller, less-viable companies to float shares with a more flexible regulatory system than the main FTSE indices.

It is designed specifically to help growing companies’ access capital. It was launched in 1995 when it was made up of just 10 companies which had a joint value of £82.2 million. Now, just under 1,000 companies from 100+ countries operating across 40 different sectors are traded on AIM with an aggregate value of circa £89 billion1.

THE INHERITANCE TAX CHALLENGE AND THE PROGENY SOLUTION

Inheritance Tax is a tax on the estate of someone who has died, including all property, possessions and money. If the value of your estate is above the nil rate band (NRB) of £325,000 then the part of your estate that is above this threshold will be liable for tax at the rate of 40%.

There is normally no tax to be paid if the value of the estate is below the £325,000 threshold, if everything is left to a spouse or partner or if the estate is left to an exempt beneficiary such as a charity. The Residence Nil Rate Band (RNRB) – also known as the home allowance – has recently been introduced which means if you give away your home to your children or grandchildren, your threshold will increase to £425,000. And £450,000 after April 6th.

However, there are ways for investors with estates larger than this to mitigate the impact of IHT through the choice and type of investments in their portfolio.

An AIM portfolio is a discretionary, managed service which chooses investments from this alternative market. It allows clients to invest in the smaller companies traded on AIM, many of which qualify for Business Property Relief (BPR) – an established form of tax relief that looks to benefit investments in specific businesses.

In recent years investment in AIM companies has grown in popularity as a viable estate-planning option. Not all companies listed on the AIM qualify for BPR but the shares of the unquoted companies that do will attract 100% relief after two years. This means that shares in BPR-qualifying stocks can be left to beneficiaries free from IHT, provided the securities have been held for two years at the time of death.

If you’d like to discuss inheritance tax and its potential implication, do not hesitate to get in touch to arrange a complimentary consultation with one of our advisers.