Do all AIM shares qualify for inheritance tax relief? Not all AIM shares qualify for inheritance tax relief, though most will. Generally, property companies, finance companies or professional companies will not qualify for IHT relief.
Most AIM stocks are exempt from inheritance tax (IHT) if they’ve been held for more than two years, and depending on individual circumstances it may be possible for AIM shareholders to qualify for the income tax and CGT reliefs when held via an Enterprise Investment Scheme, or through CGT Entrepreneurs Relief.
Shares in a private company are subject to IHT but there is a very valuable relief known as business property relief (BPR). If BPR applies then the shares can be transferred on death or during lifetime free of IHT.
In summary: Many AIM shares qualify for BPR, which provides 100% relief from IHT when passing them on after death (if they have been held for a minimum of two years).
What investments are free of inheritance tax?
Some types of investments buy shares in one or more privately-owned companies that qualify for business relief. If you hold these shares for two years, their value on your death will qualify for business relief, making them exempt from inheritance tax.
- Bare trust.
- Discretionary trust.
- Flexible trust.
Which AIM stocks qualify for IHT?
Shares traded on the Apex and Access segments of the Aquis Stock Exchange also qualify for IHT relief. IHT-related investments and portfolios represent an important component of the cash invested in AIM companies.
On the whole, AIM shares are treated just the same as those on the Main Market, in that income generated through dividends is taxable, and gains are subject to Capital Gains Tax (CGT).
What assets are subject to IHT?
HMRC can ask to see records up to 20 years after Inheritance Tax is paid. Assets include items such as money in a bank, property and land, jewellery, cars, shares, a payout from an insurance policy and jointly owned assets.
Are legacies subject to IHT?
The specific legacies are subject to tax. The total value of both the specific and pecuniary legacies passing to friends and family exceeds the IHT threshold and therefore the estate is taxable.
What is the best way to mitigate IHT?
How to avoid inheritance tax
- Make a will. …
- Make sure you keep below the inheritance tax threshold. …
- Give your assets away. …
- Put assets into a trust. …
- Put assets into a trust and still get the income. …
- Take out life insurance. …
- Make gifts out of excess income. …
- Give away assets that are free from Capital Gains Tax.
Tax incentives for companies investing in AIM companies
Although shares and securities traded on AIM are colloquially referred to as ‘listed on AIM’, they are in fact not listed, but rather admitted to trading on AIM.
Five Ways to Minimize or Avoid Capital Gains Tax
- Invest for the long term. …
- Take advantage of tax-deferred retirement plans. …
- Use capital losses to offset gains. …
- Watch your holding periods. …
- Pick your cost basis.
What is the difference between listed and unlisted companies?
A listed company is a stock exchange-listed company wherein the shares are openly tradable. An unlisted company is a company that is not listed on the stock market. Listed companies are acquired by several shareholders. Unlisted companies are acquired by private investors like founders, founders’ family and peers.
What assets are excluded from IHT?
Land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled. Land, buildings or machinery used in the business and held in a trust that the business has the right to benefit from.