If you have a surviving spouse or life partner, they may receive a one-time ISA allowance (known as an Authorized Additional Subscription or APS) equal to the total value of your ISAs. This means they can add your ISA to theirs after your death, while the funds remain in the ISA. For AIM ISA investments, this does not reset the two-year clock for BPR. Read more about the rules » The rules for issuers whose shares are listed on target are less demanding than those for the official listing of the London Stock Exchange; As a result, investment risks are higher. For unlisted companies, the risks are much higher than for listed companies; It may be difficult, if not impossible, to sell these shares or to assess their value or the risk involved. How you use the Aim BPR tax relief in practice depends on your personal circumstances and degree of practice. It is certainly possible to build your own portfolio of target stocks, but you need to be sure that you can choose investments wisely and keep an eye on tax regulations. In a broader sense, you also need to be aware of the potential for tax reforms in the future that torpedo any strategy you develop today. The fact that the Chancellor let the BPR get away with it in March does not mean that he will not change the rules in the future. Given that the Tax Simplification Office has recommended a reform of inheritance tax, the BPS remains a likely candidate for revision.
The basic idea of BPR is that if you leave the assets of the business to your heirs – such as a company you founded or its assets – they should be treated differently from an inheritance tax perspective than the rest of your estate. In practice, regulation regarding companies and inheritance tax can become quite complicated, but one aspect of bpS is valuable to a potentially wide audience, including people who have never started a business in their lifetime. In any case, the normal rules apply if you seek the advice of a professional. Only work with fully regulated companies – those authorised by the Financial Conduct Authority. And do your due diligence – look at companies` professional qualifications, compare their fees (they can be high even by financial industry standards for that particular service), and make sure you`re comfortable with them before handing over your money. AIM ISAs are aimed at experienced investors whose estates are large enough to be affected by inheritance tax and who wish to retain isa benefits. They should only be considered part of a larger investment portfolio by those who like to take significant investment risks. The type of ISA AIM chosen depends on many factors, including attitudes towards risk and whether income is needed. If in doubt, always seek professional advice. Tax regulations change and tax benefits depend on circumstances. It should be noted that the benefits of the estate tax portfolio service are based on the applicable tax rules that apply to the duration of an investor`s portfolio.
The rules relating to the tax or its interpretation, as well as the applicable tax rates, may change. The details of this document are a simplified summary of the relevant tax regulations. Could you clarify the rules here? Can I buy and sell Aim shares at the same value over a two-year period, as the investment is still eligible for BPR? How soon should the proceeds be reinvested? What happens if I add more stocks to an Aim portfolio over time? If possible, would it be wise to open a separate Isa account only for Aim shares? Just make sure you understand the rules. First, BPR comes with a two-year waiting period – you must have held eligible Aim shares for two years prior to your death for the assets to fall from your estate for estate tax purposes. One of the great advantages of investing in shares on AIM is the tax advantage it offers, as AIM shares can provide 100% inheritance tax relief by lightening commercial real estate. While not for everyone, it can be very tax-efficient, provided you fully weigh the pros and cons and seek appropriate investment advice, as this article explains. The taxpayer must reside in the United Kingdom at the time of death. It`s pretty hard to lose your UK-based status.
Even if you leave the UK with the intention of never returning, 3 full tax years must pass before your UK residency expires. But if you`ve ever been based elsewhere, this could be a problem. You need to make sure that a UK residence has been acquired before relying on this form of planning. The shares must have been held by the transferor for at least two consecutive years prior to the filing of the exemption application. If shares of a corporation that are no longer considered “relevant commercial property” are sold and replaced with shares that are “relevant commercial real property”, the two-year clock must start running again from the date of acquisition of the new shares. If you died within two years of the investment and the portfolio was liquidated, the product may be subject to the IHT unless it is passed on to your spouse or life partner. AIM actions can be unpredictable. AIM companies are smaller and less established companies and the AIM has fewer investors than other stock markets, so stock prices can be volatile, rising or falling rapidly. Stocks can sometimes lose more than 40% of their value, cancelling out IHT savings. James Sharp & Co does not offer discretionary or managed IHT portfolio services. Therefore, we are not responsible for the regular evaluation or review of investments in a client`s portfolio. This means that we will not proactively evaluate or review a client`s portfolio, but only when a client asks for advice.
An ISA AIM has an initial fee (it varies considerably from zero to 4.5%) and an annual administration fee (usually in the range of 2% plus VAT). In addition, the activities of the underlying business assets must also be used in ongoing transactions that effectively exclude companies that trade in securities, land or buildings or that are involved in investment activities. © 2022 RJP LLP is registered in England and Wales. Registered company number: OC323740. Registered Office: Ground Floor, Egerton House, Baker Street, Weybridge, Surrey KT13 8AL Are all AIM shares eligible for estate tax relief? Investments in certain securities, including shares of small companies, companies in specialized sectors and/or unlisted companies, are generally associated with higher risk or above-average price movements (volatility) than investments in larger, more established companies. The markets of these companies can suffer from partial or total illiquidity, which can make it difficult, if not impossible, to sell an investment. Past performance is not indicative of the future. Your capital is at risk and can both go down and up, and the amount realized may be less than the amount originally invested. Business Property Relief (BPR) was a key survivor of Chancellor Rishi Sunak`s spring budget in early March. Tax relief can be a valuable tool in estate tax planning, but it has been cancelled for the chop. But it turned out that the Chancellor did not mention BPR, so people were given the freedom to continue using it, at least for now. The BPR is an important tax break for family business shareholders and family business owners, as shares or shares are often taken over by the BPR upon death, meaning that no inheritance tax is levied.
Without this relief, multigenerational family businesses could be at risk, as the IHT would have to be funded in the event of the death of a family member. Indeed, the unlisted shares of a company fall within the competence of BPR. Basically, “unlisted” has a broad definition – it includes companies listed on the Aim market, the junior market of the London Stock Exchange. I would like to take this opportunity to thank you very much for the extraordinary work you have done to guide us through this process. My family and I also appreciate the care and compassion you and your team show in every business. Our thanks go to everyone. There are a number of funds that manage an Aim portfolio and filter stocks as much as possible to exclude companies that are not eligible for the OPI. Octopus is one of them. I prefer to buy shares directly to avoid management fees and currently hold a mix of Aim and Main Market shares in an individual savings account (Isa) managed by iDealing.com. I read in the IC that the two-year rule requires the continued holding of Aim shares during the period, but you do not have to hold the same shares continuously.