AIM (formerly the Alternative Investment Market), the London Stock Exchange’s international market for smaller growing companies, is home to over 800 companies with a combined value of £134 billion (January 2022).
AIM is no longer just about highly speculative micro caps that may never generate a profit - or cash for that matter! There are now hundreds of AIM companies with robust business models and a history of profitability, cash generation and attractive dividends - at the end of January 2022 the AIM had 28 companies valued at more than £1 billion, the largest of which was valued at £3.5 billion and would therefore be eligible for entry to the FTSE100 index of leading UK companies.
Many of these excellent businesses have seen their shares soar over the past few years, far outperforming larger but lower growth companies on the main stock market - our research has uncovered plenty of AIM stars and also provided an early warning of problems.
Investment in ‘BPR qualifying’ AIM companies can attract 100% relief from Inheritance Tax provided that the investment is held for at least two years - that’s about the biggest tax break the UK government has ever given us, so it seems like a good idea to use it, especially with the potential for investment success as well.
Investment in AIM shares for IHT planning purposes is all about constructing a well-balanced diversified portfolio of BPR qualifying AIM shares, not just about individual stock selection. AIM Inheritance Tax portfolios managed by our associates Fundamental Asset Management have delivered outstanding returns since inception in 2004.
The tax benefits are only available to individual UK tax paying investors holding shares in their own name (through a stockbroker’s nominee is fine), so the individual investor can’t invest in a fund and still receive the Inheritance Tax benefit.
So AIM really is a market where the small private investor should have the upper hand.
Since 2013 AIM shares are also permissable investments in ISAs (Individual Savings Accounts) offering further attractive tax benefits.
You can transfer unlimited amounts from existing ISAs. The maximum that can be subscribed to an AIM ISA in a given tax year is determined by the ISA allowance at the time – currently £20,000 per individual per tax year. The minimum investment in an AIM ISA IHT portfolio will vary depending on the provider. In some cases, the minimum investment is higher than the current ISA allowance, so the portfolio can only be accessed by transferring existing ISAs.
This is not an offer to sell or a solicitation of an offer to purchase shares. The information and opinions stated above are for background purposes only and do not purport to be full or complete. Past performance is not necessarily a guide to future performance as the price of shares can fall as well as rise and you may not get back all the money you invested. The extent of the tax benefits referred to above will depend on the qualifying conditions and investors should seek professional advice before considering investing. No reliance may be placed for any purpose on the information or opinions contained in this document of their accuracy or completeness.
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