Inheritance Tax Solutions

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Inheritance tax solutions

These can take the form of investment trusts, AIM listed portfolios and Business Property Relief.

What is inheritance tax?

Inheritance tax is paid on the value of the assets that a person leaves behind when they die and it can also be applied to some gifts that are made before someone dies.

When you die your ‘estate’ is the asset you leave behind. This can be left to your spouse or partner free of inheritance tax however, if you leave this to someone such as another family member or friend then it may be liable for inheritance tax.

If your estate is worth more than £325,000 (the nil-rate band) then HMRC will expect you to pay inheritance tax at a rate of 40% on the total value of the assets in your estate over that amount.

We provide advice to our clients on inheritance tax solutions and these can come in the form of Investment Trusts, AIM listed portfolios and  Business Property Relief.

inheritance tax solutions

AIM listed portfolios

An AIM listed portfolio is a portfolio of AIM-listed shares that should benefit from inheritance tax relief, designed to be held in or outside an ISA. Any growth and income from the investment is tax-free.

The reason the portfolio gets inheritance tax relief is because the portfolio invests in AIM companies that qualify for Business Property Relief (BPR) – see below.

If you have shares in AIM companies that qualify for BPR for at least two years and still hold them on your death, no inheritance tax should be due.

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Business Property Relief

Business Property Relief (BPR) has come a long way since it was introduced in the 1976 Finance Act. Its main aim is to ensure that after the death of the owner, a family-owned business could survive as a trading entity, without having to be sold or broken up to pay an inheritance tax liability. More recently, governments encouraged people to invest in trading businesses regardless of whether they run the business themselves.

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We do need to remember that not every investment or interest in a business will qualify for BPR. However, BPR is available for shares in an unquoted qualifying company, shares in a qualifying company listed on the Alternative Investment Market (AIM) or an unincorporated qualifying trading business such as a partnership.

If you would like to understand more about inheritance tax solutions, then please get in touch.

*Please note: AIM/BPR investment are high risk and not suitable for the majority of investors. You could lose your capital. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. There is no guarantee that firms will maintain their qualifying status.

If you would like to discuss inheritance tax solutions in more detail, please get in touch.

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