IHT Planning and AIM
Paying taxes unfortunately is a fact of life, and nearly all of them come before death. The exception to the rule is Inheritance Tax (IHT). When it comes to thinking about life after we are gone, however, many of us are uncomfortable discussing this with our families. The danger is that, if no forward planning is made, then the value of any assets in your estate above the IHT threshold will be liable for IHT at a rate of 40%. Among the assets included in the calculation of Inheritance Tax are your family home and your savings and investments, including Individual Savings Accounts (ISAs).
There are a number of well-established tax planning solutions to help with Inheritance Tax planning. Each comes with its own benefits and risks, and it is important you fully understand these before any decisions are taken. A qualified financial adviser can help with this and ensure that any recommended plan is suited to your individual needs and circumstances.
To help explore the question of retirement and estate planning, Thorntons Investments, in conjunction with our colleagues at Thorntons Law, are holding an informal breakfast seminar at the St Andrews Golf Museum on 25 February from 08:30 to 10:30, when we will look at some of the tax planning opportunities available, along with legal considerations around the use of Wills for estate planning.
Some of the more traditional ways to mitigate Inheritance Tax can be inflexible and may mean losing control of your capital. For example, where certain assets are gifted, you may have to survive for seven years before their value fully falls outside of your estate. Investors who are reluctant to give up access to their capital, and/or have concerns over their health and life expectancy, may wish to consider investing in companies listed on the Alternative Investment Market (AIM) as part of their estate planning. Since 1995, the AIM market has helped nearly 3,900 small companies raise over £115bn, and has been a major boost for innovation, employment and growth. Household names past and present include Dobbies Garden Centre, Domino’s Pizza, ASOS and Fever-Tree.
Investing in certain qualifying AIM shares offers you the prospect of obtaining IHT relief after only two years and, if they are held at death, your executors can deduct their value when calculating any IHT liability. Unlike many other estate planning solutions, investing in AIM companies allows you to maintain access your capital, so should your circumstances change and you choose to sell some of the AIM shares held in your portfolio, this will not affect the potential IHT relief available on any remaining AIM shares held. Investment in AIM company shares is considered higher risk, and there is no guarantee a stock will qualify for Business Relief at the date of death. Aside from the primary purpose of IHT planning, investing in AIM listed companies also offers the potential for significant investment growth over the longer-term.
Inheritance Tax planning allows you to optimise the wealth you pass on to your beneficiaries and planning ahead should help maximise your ability to help the next generation after you’ve gone.
Venue: St Andrews Golf Museum
Date: 25 February 2020
Time: 08:30 to 10.30
If you would like to attend, then please visit Eventbrite or contact our marketing department (details below). We would be delighted to see you at the presentation and you might like to have a tour of the museum afterwards.
This document has been prepared using all reasonable care and does not constitute investment advice. The value of investments can fall as well as rise and you may not get back the amount originally invested. Information concerning the tax treatment of an investment is based on our understanding of current Inland Revenue rules which may be subject to future change. Tax advice is not regulated by the Financial Conduct Authority.