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We offer a portfolio that mitigates the effects of Inheritance Tax on your estate by taking advantage of an established form of tax relief.
Our award-nominated AIM portfolio allows you to invest in qualifying companies traded on the London Stock Exchange (LSE) Alternative Investment Market (AIM). These are eligible for Business Relief – a tax relief that looks to benefit investments in specific businesses.
Shares in businesses that qualify for Business Relief will qualify for 100% tax relief after two years, whereas many forms of estate planning such as gifts and simple trusts can take seven years until they are fully exempt. This means that the investments can be left to beneficiaries free from Inheritance Tax, providing they have been held for two years at the time of death. It is possible for your money to move between qualifying securities during that two-year period and still be eligible for tax relief as long as it remains invested within your AIM portfolio. It is important to note that, by their nature, AIM shares are considered high risk.
You will always have access to your investments in the portfolio and can decide to sell your shares at any time for your money to be returned to you (although Inheritance Tax relief will be lost on money removed from the AIM portfolio).
The AIM market is home to a wide variety of companies that offer potential for capital gains and dividends. The market has had some tremendous success stories over the years and there is good capacity for investors to see healthy growth.
If you would like to discuss your options for investing in the AIM portfolio, please get in touch.
What is Inheritance Tax?
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 a 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 that if you give away your home to your children or grandchildren, your threshold will increase to £475,000 in the 2019/20 tax year and £500,000 from 2020/21.
Investment in smaller companies can involve greater risk than investing in developed, more established markets. Above average price movements can be expected and the values of the investment may change suddenly. The promised payment of income and the return of capital could be in jeopardy in the event that the company has problems meeting its financial obligations.
The FCA does not regulate Inheritance Tax Planning It is important that you seek specialist tax advice from an appropriately qualified professional, as Progeny Asset Management is not able to offer guidance or advice on taxation matters.
The value of investments and income from them is not guaranteed, can fall, and you may get back less than you invested. Your capital is therefore always at risk. It should be noted that stock market investing is intended for the longer term. There is an extra risk of losing money when shares are bought in some smaller companies, as there can be a big difference between the buying and selling price.