Alternative Investment Market (AIM) Portfolio

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Under current legislation bequests made to a deceased’s spouse or to recognised charities escapes inheritance tax (IHT). Otherwise the first £325,000 (frozen until April 2028) of assets bequeathed on death and, the first £175,000 of a deceased’s main residence left to a direct descendant, attracts no IHT, everything over this figure attracts tax at 40%.

An exemption to this are shares in companies that qualify for Business Relief. Companies that qualify for such relief are those that are not listed on a recognised stock exchange. Most importantly the AIM market is not a recognised stock exchanges for this purpose, although companies trading their shares on it are quoted and may be traded.

Business Relief assets are:

  • Exempt from IHT if the initial investments into AIM securities were purchased at least two years before the time of death and remained in AIM securities up to the date of death.
  • Subject to capital gains tax (CGT) at 10% for basic rate taxpayers and 20% for higher rate taxpayers on gains in excess of the annual exemption (£6,000 for 2023/2024 reducing to £3,000 for 2024/2025). Where these investments are made inside an ISA they are not subject to CGT.

There are some AIM companies that do not qualify for these reliefs. These include companies dealing in property, investments and general financial instruments (i.e. investment companies) and cash shells. There are over 700 companies listed on AIM, as at March 2023. This makes it possible for us to create and manage a portfolio to take advantage of these far reaching tax breaks.

We do have to point out that AIM securities are regarded as high risk and trading liquidity cannot be guaranteed. Investors should only contemplate investing in such equities if they can afford to lose any of the capital committed.

We believe the higher risk nature of AIM investing makes it essential to have a broad spread of companies that have been researched and are regularly monitored.  At any given time we are monitoring 50 or more companies from which we select for IHT mitigation portfolios. These companies are regularly appraised and added to when appropriate opportunities arise.