AIM Inheritance Tax Portfolio Service

Offers investors the expectation of 100% relief from Inheritance Tax (IHT) after only two years.

Service Overview

Thorntons Investments have been managing AIM portfolios since 2006.

Our AIM Inheritance Tax Portfolio Service is a discretionary managed portfolio of AIM company shares which if held for two years and at death, are expected to qualify for business relief and be exempt from IHT.

Our experienced investment team select and manage a well-diversified portfolio of smaller companies chosen for their quality, strength and growth potential.

We seek capital preservation and long-term growth together with a respectable dividend yield with the aim of covering most or all charges.

Availability and Charges

Our AIM IHT service is only available through qualified financial advisers.

Investment can be made in one of two ways:

1) Advisers can place client investment with us directly.

Annual Management Charge: 1% (plus VAT) up to £1m, 0.5% (plus VAT) on balance over £1m
Custody, dealing and administration charges: 0.4% pa
Investment options: ISA, ISA Transfer and GIA
Minimum investment: £50,000

2) Also available as a model portfolio on the Standard Life Wrap and Ascentric platforms.

Annual Management Charge: 1% (plus VAT)
Platform specific fees will apply
Investment options: ISA, ISA Transfer, GIA and SIPP
Minimum investment: £20,000

There are no initial, withdrawal or exit charges, other than the trading and banking costs associated with investment and disinvestment.

All charges are published in our Quarterly Investor Factsheets.

Contact

For further information please contact our Head of Business Development David Holmes.

We have a range of adviser and client support material available in our literature library.

Factsheets

These are held in our literature library.

Performance

The performance of our AIM portfolio can be found here, with further information available in our quarterly factsheets.

Independent Research

MJ Hudson Allenbridge

Independent research company MJ Hudson Allenbridge have published their inaugural AIM IHT Spotlight Report, which is available at the link below:

They are currently carrying out an independent review of our AIM IHT Portfolio Service which will be available soon.

MICAP

Advisers who subscribe to MICAP’s research and due diligence services for tax-advantaged investments will find our AIM IHT Portfolio Service listed.

MICAP have carried out an independent review of our service, and a free copy of their Review Report is available at the link below:

Who may benefit?

Clients may be unwilling to give their money away and wish to retain full access to their investments. On death, the balance of qualifying AIM shares held for at least two years can then pass to their beneficiaries free from IHT.

ISA holdings form part of your client’s estate after they die, meaning that inheritance tax may be payable on their value. Since 2013, AIM shares can be held within an ISA, allowing an investor to continue to enjoy tax-free growth and income and reduce the amount of their estate liable for IHT. Savings held in a Cash ISA can be transferred and used to purchase AIM shares.

In contrast to making a gift and having to survive for seven years, BR qualifying AIM shares held for at least two years and at death, are expected to qualify for IHT relief. For clients with health concerns, there are no medical underwriting requirements, unlike some Trust investments.

Some younger clients may have no immediate liability to IHT, but face the prospect of an IHT problem in future, for example from an inheritance. Making an AIM/BR qualifying investment provides an opportunity to plan ahead, perhaps by using their annual ISA subscription.

Some clients may not want the complexity and costs of setting up a trust or may have difficulty in deciding who to appoint as trustee.

Significant limitations exist for an attorney to make lifetime gifts. An AIM/BR qualifying investment may provide a suitable IHT planning solution, with access to capital if required, for example the payment of care home fees.

BR qualifying assets settled into a discretionary trust will not be liable to the 20% Chargeable Lifetime Transfer.

Where a business is sold for cash, the proceeds immediately form part of the estate for IHT purposes. However, where the business assets already qualify for business relief, then should the proceeds be invested into BR qualifying AIM shares there is no need to restart the ‘two-year’ clock. The assets are expected to be immediately outside of the estate on death, and the investor retains access and control to their capital, along with the prospect for growth. This offers a suitable IHT planning opportunity for clients who are either considering selling their business, or who sold their business within the last three years.

Risks

The performance of shares in AIM-listed companies tend to be more volatile than those of larger companies and the risks of capital losses are greater. The value of the investment may go down as well as up, and may end up being less than the initial sum invested.

HMRC will assess AIM company qualification for Business Relief when an investor dies, meaning a qualifying investment cannot be guaranteed to always remain so.

Rates of tax, tax benefits and allowances are based on current legislation and HMRC practice, and are dependent on an individual’s personal circumstances. These are all subject to change meaning that tax reliefs cannot be guaranteed.

The shares of AIM-listed companies can be more difficult to sell than those of larger companies, and may be illiquid. Investors looking to sell may have to accept a price below the real value of the companies, and may experience delays in completing a sale.