We have been successfully investing in companies listed in the Alternative Investment Market (AIM) since we launched the service in 2006. The AIM market features a wide range of participants from venture capital backed start-ups to mature smaller businesses, well established in their industry sector.
The portfolios we construct are well diversified across different commercial and geographical sectors, which we research carefully to identify those that we feel have a strong trading record and justifiable prospects for sustainable profit growth.
For investors with a higher risk appetite who are comfortable investing in this small company marketplace, it can offer an opportunity for capital growth over the long term. It also allows those at a stage in life when mitigating inheritance tax is a priority, to benefit from a uniquely favourable set of tax breaks on AIM investments, which have the effect of reducing Inheritance Tax (IHT) liability.
Your investment manager will guide you through the particular components and conditions that must be met for any AIM investment to qualify for favourable IHT treatment by HMRC. Tax breaks are available but will only apply to ‘qualifying assets’ that are held in the portfolio for at least 2 years prior to death.
We would always recommend that you discuss with your financial adviser the benefits of, and need for, AIM investing as part of your overall financial planning.
Please refer to our brochure for full details.
Our clients were an elderly married couple who anticipated a sizeable inheritance tax bill unless they took action. Their portfolios to date had provided the capital growth and the income stream that had allowed them to remain in their own home and maintain a comfortable lifestyle. After further discussions, it was clear that there were more than sufficient funds to cover existing, as well as likely, care costs in the foreseeable future.
It was determined that an appropriate course would be for each to invest a proportion of their capital in a portfolio designed to mitigate the impacts of inheritance tax. The solution recommended was a portfolio of BPR qualifying AIM listed securities which, if held for a minimum of two years up to the date of death, could reduce the couple’s taxable estate
“When constructing our AIM portfolios we take a balanced approach, seeking to achieve effective diversification and exposures to defensive areas of the market, as well as higher growth sectors. Thorough due diligence is conducted on each individual security to identify suitable investments with a strong investment case. The result of this is a portfolio designed to withstand volatile market conditions and prosper during periods of market growth in order to protect an investor’s capital throughout the cycle until the time comes that the estate is passed on.” (Investment Manager at CS)
The portfolio strategy was implemented, achieving capital appreciation over the holding period. On the first death after more than two years, the survivor acquired the whole estate under spousal exemption (including the tax benefit of the portion invested in AIM). Upon her passing, the taxable estate was reduced by the amount invested in their combined AIM portfolio, saving a 40% tax bill on this amount in the region of £260k.