AIM Listed Shares to Save Inheritance Tax

Published / Last Updated on 25/02/2022

We have been approached many times by both clients and new enquiries for advice on using AIM listed shares to reduce inheritance taxes.

What is AIM? The Alternative Investment Market

AIM is a submarket of the London Stock Exchange (LSE) that allows smaller, developing companies to go public i.e., be listed on a stock exchange to trade shares, capital raise and more.  By buying AIM listed shares you are buying a share in a smaller trading company.  There are approximately 1,000 firms listed on AIM with a capitalised value of £90bn, that 90,000 million.  In short, this is roughly an average of £90m value per company listed.  This is not huge compared to the billions in value of FTSE 100 companies.

When you invest in AIM listed companies you are deemed to be investing directly in a trading business.  This means on death, your estate can take advantage of business property relief i.e., zero inheritance tax on the value of your shares.

This is clearly an effective inheritance tax planning opportunity, but it does carry some risks as firms listed are not a secure as larger company shares.

Collective AIM ISAs and GIAs

There are some investment scheme managers and promoters that offer AIM listed ISAs and General Investment Accounts (GIAs) claiming that they are effective for business property relief and therefor you can achieve inheritance tax free ISA and investment accounts status without having to give up ownership or wrap up investments inside trusts.

This is fantastic if it works, and we have seen no evidence that HMRC is contesting this.  The issue that we have is that many promoters of these investments put in the small print that you should take your own tax advice and technically, they will not defend the product in court if HMRC contests it.

Therefore, we currently do not offer advice on AIM listed ISAs and GIAs as it would be either you or us that become liable for any litigation and not the product provider/manager.  You only have to look at the recent HMRC legal proceedings and tax bills for prominent sports and comedy personalities that have received huge tax bills from HMRC and subsequently sued their financial advisers.

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