Peter talks to his financial adviser, who suggests investing in an AIM Inheritance Tax ISA, which comes with the same tax benefits his ISAs have always enjoyed, but after two years becomes free from inheritance tax, assuming it is still held at the time of death. It also offers access to the growth potential of carefully selected UK smaller companies.
Along with the benefits, however, he must also consider the risks.
The value of the investment, and any income from it, can fall as well as rise. He may not get back the full amount he invests. The shares of AIM-listed companies could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
Tax treatment depends on individual circumstances and tax rules could change in the future. Tax relief depends on portfolio companies maintaining their qualifying status.
An ISA portfolio of BPR-qualifying shares
An AIM Inheritance Tax ISA is often an adviser’s first experience of BPR-qualifying investments. We know this from working with advisers for years.
It’s common for clients to have accumulated large ISA pots that have a potential inheritance tax liability. So the concept of an inheritance tax-efficient ISA can be a compelling one for a number of suitable clients.
Clients are used to making investments. They are used to ISAs. They are not used to gifting or giving money away. And so, that makes this is a far easier conversation for many clients.
Often clients will be comfortable with the planning because they’re transferring funds from an existing stocks and shares ISA, where there is already some appetite for risk. And because the client keeps their ISA wrapper as part of the planning.
It is important to understand, however, that not all AIM shares will qualify for BPR. It is also a high-risk area where companies can fail, and this is why investors often steer towards specialist managers to create ISA portfolios for them, such as the Octopus AIM Inheritance Tax ISA.
Some of our fund managers have been investing on AIM since it began 25 years ago. It is a great market for growth and we are one of the largest and most experienced investors.
Join our AIM Inheritance Tax ISA webinar to find out more about how it works, who it’s for and how our service is managed. Sign up here
