Making Your Investments Inheritance Tax Free

At Henry Spain Investment Services we specialise in helping our clients pass on their wealth as tax efficiently as possible.

One of the ways we do this is through an investment solution that allows people to make their investments within our AIM portfolio exempt for inheritance tax after two years. 

Here’s how it works and why it qualifies for inheritance tax relief: 

Business Relief (formerly called Business Property Relief) is the 100% Inheritance Tax (IHT) relief which applies to qualifying business property. Established since 1976, it applies to certain unquoted trading businesses and companies listed on the London Stock Exchange’s Alternative Investment Market (AIM). Through investing in these companies, the capital becomes exempt from inheritance tax after a holding period of two years.

Our AIM Business Relief Portfolio

Our AIM BR portfolio is a discretionary managed portfolio of companies which qualify for Business Relief (BR), thus potentially reducing the Inheritance Tax liability on investor assets. The portfolio consists of a specific selection of established smaller, high growth companies listed on the London Stock Exchange’s Alternative Investment Market (AIM).

Through this investment option, along with the all-important IHT relief, investors are offered the potential for returns above inflation and income in the form of dividends, whilst retaining control over their capital.

The AIM portfolio constituents are selected using both technical and fundamental analysis to ascertain our views on the long-term growth prospects of each firm.

The portfolio is diversified between market sectors allowing investors to potentially benefit from a group of stocks that are intended to complement each other in the long term. 

To Find out more about Inheritance Tax planning and how our AIM portfolio fits along side other actions investors can take to reduce inheritance tax download our free guide. 

The Key Advatages Of This IHT Planning Option Are:

  • It’s Simple: BR is one of the more simplistic methods of IHT reduction and remains separate from your existing portfolios.
  • It’s Quick: Relief from IHT is relatively quick- capital is exempt after just two years.
  • It gives you access to your capital: Investors retain access to their capital throughout and can make withdrawals or additions.
  • Optional Income: Investors may choose to take income from the portfolio
  • Capital Growth: The portfolio aims to provide capital growth above inflation.
  • ISA benefits: Investors have the option to hold the portfolio in their ISAs, allowing them to also benefit from no Capital Gains Tax, and no Income Tax on dividends.
  • Trusts benefits: Investments that qualify for BR and have been held for over 2 years can be transferred into trust and avoid the chargeable tax of 20% when the amount is over the nil-rate band.

The Key Risks To Consider Before Investing:

  • Risk to Initial Capital: There is no guarantee that the capital will be protected given this 100% equity strategy.
  • Tax rules may change: This article explains the current legislation and there is no guarantee that this will not change in future.
  • Not all investments may qualify for BR: In certain circumstances, some investments may not satisfy BR criteria and therefore may fall outside of the estate upon death.
  • AIM shares are more illiquid in nature: AIM shares are typically smaller companies with less actively traded markets, therefore may experience occasional problems with liquidity.
    Investing in the AIM portfolio should be regarded as a higher risk, long term investment: This solution should only be considered alongside an existing estate planning strategy, with higher risk owing to the nature of AIM stocks and a 100% Equity portfolio.

Given the potential risks these investments should only be considered in specific circumstances and would not be suitable to all investors. To speak to one of our advisers about whether this solution would be suitable for you, contact us today

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If you would welcome a free second opinion on your investments feel free to get in touch ,