The Quilter Cheviot AIM Strategy is a tax-efficient discretionary strategy where investors can gain access to a diversified portfolio of companies listed on the Alternative Investment Market (AIM). As these businesses are expected to qualify for Business Relief they can mitigate potential inheritance tax liabilities on the part of the investor.
What are the benefits of the AIM Strategy?
- Potential inheritance tax (IHT) reductions
- Diversity through cross-sector investments
- Investments can be traded and valued
- AIM portfolios can be held within an ISA wrapper
- An accessible entry point of £100,000.
The Quilter Cheviot AIM Strategy investment process
We conduct research on suitable stocks for inclusion in the AIM strategy with the following attributes::
- Maintain sustainable revenues
- Demonstrate financial strength
- Demonstrate sufficient liquidity, so as to be relatively easily traded
- Uphold a positive investment outlook
- Diversify across industries
- Meet the requirements to qualify for business relief
Our research team performs a screen on AIM listed stocks with a market cap of at least £250m and a free float of at least 50% (free float represents the portion of shares a company that are readily transferable on the stock exchange). This list is then reduced to stocks that qualify for Business Relief (formerly Business Property Relief). These criteria reduce the list of stocks to c.50. From this potential buy list the team then conduct in depth research on the characteristics of individual stocks sought for the portfolio.
Business Relief for Inheritance Tax
Business Relief was introduced in the UK in 1976 with the aim of protecting qualifying business assets from IHT, including 100% relief for shares held in qualifying unquoted trading companies. Unquoted shares for these purposes include shares quoted on AIM. If the company qualifies for relief and the asset is held for at least two years, the value of it is then exempt from IHT on the investor’s death (subject to potential restrictions where the company holds any ‘excepted’ assets, broadly meaning any investment assets not required for the company’s business).
The investee companies selected for inclusion within your Quilter Cheviot Discretionary Managed AIM Strategy will be subject to an annual, ongoing, independent review by tax experts engaged by Quilter Cheviot. This review examines the accounts of each investee company and provides a summary of the extent of the availability of Business Relief that can be expected to be made available to investors in that company. Investors should note that the final decision on whether the stocks qualify for Business Relief will always be made by HMRC at the time of probate and will be based on the circumstances of the investee company at the date of the investor’s death.
Things to consider
- You should be aware of the higher levels of risk associated with investing in smaller companies.
- As there is a less readily available market for investments in smaller companies this can make selling investments more difficult.
- The advantages from investing in this portfolio depends on the existing tax rules in force. Any benefits gained from maintaining AIM stocks could be affected by any future changes to those rules.
- The service will only benefit those investors with estates higher than the current level of IHT-free allowances and is not recommended for any purpose other than sheltering assets from inheritance tax.
- As business relief rules require investments to be held for at least two years, you must have held investments in a qualifying portfolio for at least two years on death to qualify for IHT relief.