Mitigating exposure to Inheritance Tax
Our Inheritance Tax Portfolio Service invests in AIM shares selected for long-term growth potential, as well as seeking to qualify for Business Relief.
Designed for those who are prepared to take a higher degree of risk, and looking for a long-term investment into smaller companies, with the benefit of seeking to mitigate exposure to Inheritance Tax (IHT). It is more suited to investors with sufficient resources to take additional risk, and with assets in excess of the nil rate band.
Investing in smaller companies, whether quoted or unquoted, carries a higher degree of risk and AIM investments are generally more volatile and may not be possible to sell at a time of your choosing, so any investments in the service should form only part of your overall wealth.
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Inheritance Tax Portfolio Service overview
Our Inheritance Tax Portfolio Service is a fully managed service, that provides a portfolio of stocks in smaller UK companies. The main benefits that this service offers are:
- A segregated portfolio, with access to capital subject to liquidity constraints
- Shares selected for long-term growth potential (based on a time horizon of over 10 years)
- Potential to attract Business Relief when calculating IHT (assuming the portfolio is fully invested for two years before death)
- Flexibility to invest in the service using an ISA wrapper
This Service offers one method of potentially mitigating Inheritance Tax. However, other methods may be more appropriate for you. If you are unsure about Inheritance Tax planning, we recommend seeking an Inheritance Tax review.
Capital at risk.
Please do remember that as with all investments, your capital is at risk and the value of your investments will rise and fall over time. Past performance is not an indication of future performance. Tax treatment depends on individual circumstances and may be subject to change in the future. Although this service seeks to mitigate IHT, it will not be suitable for everyone and there may be other tax planning methods that are more suitable for you.
How does the Inheritance Tax Portfolio Service work?
Our Inheritance Tax Portfolio Service provides clients with a segregated portfolio, in individual or joint name, and can be held in an ISA wrapper.
We acquire investments on the understanding that they are Business Relief qualifying at the time of purchase, but there can be no guarantee that HMRC will grant Business Relief for Inheritance Tax on each investment made in the portfolio. Certain investments may lose their qualifying status if, for example, the principal activity of the business was to change.
Business Relief is subject to a minimum two-year holding period. However, due to factors including the illiquidity of AIM investments, your portfolio will not be invested immediately after funds are received. We typically advise the investment process could take at least six weeks, meaning it will take over two years to benefit from any Inheritance Tax relief. There is always likely to be an amount of cash in the portfolio, and any such cash will not qualify for Business Relief for IHT.
Our Inheritance Tax Portfolio Service Managers
The Inheritance Tax Portfolio Service managers are Graham Neale, Matthew Hackett-Brown and Oliver Dudlyke.
Graham Neale, Partner
Graham was previously Killik & Co’s Head of Research, has over a decade’s experience of fund management and equity research, and is a CFA charterholder.
Matthew Hackett-Brown, Portfolio Manager
Matthew joined the portfolio management team in 2017. His role incorporates fundamental analysis, portfolio construction and trading.
Oliver Dudlyke, Asset Management Assistant
Oliver’s focus is on quantitative analysis, fundamental research, and risk management.
Risks to be aware of
Investors should also be aware of the potential for unfavourable changes to Inheritance Tax legislation and/or adjustments to Inheritance Tax thresholds.
Investments in smaller companies, whether quoted or unquoted, carry a higher degree of risk than investing in more liquid shares of larger companies. AIM investments are generally more volatile in price than shares on the Official List and may be impossible to sell at a time of your own choosing. It is for these reasons we generally recommend that any investments in the service form only part of your overall wealth.
Please do not assume that past performance will repeat itself and you must be comfortable in the knowledge you may receive less than you originally invested. Ultimately this may outweigh any tax benefits. Although this service can help mitigate Inheritance Tax, it will not be suitable for everyone and there may be other tax planning methods available that are more suitable for you. If you are unsure, you should always seek financial planning and tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.
For more detailed information, please discuss with your Investment Manager or Wealth Planner.
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