The Quilter Cheviot AIM Strategy provides a professionally researched and managed portfolio of AIM-listed securities for those clients who want to shelter part of their estate from IHT.
Our Quilter Cheviot AIM Strategy is a service available for those clients in which you are currently assessing their estate planning needs. Quilter Cheviot’s AIM strategy will provide a professionally researched, managed portfolio of AIM-listed companies that qualify for Business Relief (previously known as Business Property Relief).
The Quilter Cheviot AIM strategy service needs to be held for a minimum of two years in order for the assets within the portfolio to be able to qualify for Business Relief. The assets must be held at the time of death in order to qualify for relief from inheritance tax.
Investors in the service gain access to a portfolio of AIM listed companies approved by Quilter Cheviot with additional research from Old Mutual Global Investors.
The portfolio will contain AIM listed stocks covering a variety of industry sectors. The main objectives of the portfolio will be to make sure, as far as possible, that the investments selected within the portfolio are likely to qualify for Business Relief, thereby mitigating a potential inheritance tax (IHT) liability on the part of the investor.
Quilter Cheviot will consider these requirements ahead of any long-term potential performance when selecting stocks to invest in.
The Quilter Cheviot AIM Strategy investment process
Quilter Cheviot has teamed up with the UK Mid & Small Cap Equities team at Old Mutual Global Investors. The Old Mutual analysts provide us with advice and research on suitable stocks for inclusion in the AIM strategy. Their recommendations focus on AIM listed stocks that will:
- 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
Benefits of the AIM Strategy
- Clients can hold an AIM portfolio within an ISA wrapper
- It offers the opportunity to invest in younger businesses with potentially exciting growth prospects
- Investment can be spread across multiple sectors
- The client keeps full beneficial ownership of the assets
In addition to the above, provided investors are prepared to accept the higher levels of risk associated with investing in AIM listed companies, Business Relief qualifying investments can help satisfy a number of different criteria when compared to traditional estate planning options such as gifting assets or using a trust.
It can take up seven years for a gift or asset held within a trust to be classified as being outside the original owner’s estate for IHT purposes. However, a BR qualifying investment can be passed on at death free from inheritance tax, provided it has been held for at least two years and at the time of death.
Settling assets into trust or gifting assets transfers ownership of the assets away from the original owner. However shares in BR-qualifying investments remain in the investor’s name. Subject to the liquidity of the shares held within their AIM portfolio, AIM investors can ask to sell shares from the portfolio and have the proceeds returned to them, or they can set up regular withdrawals to meet changing needs, such as care home fees.
Unlike gifts of cash or cash held in a trust, companies listed on the Alternative Investment Market provide investors with an opportunity to increase the IHT free portion of their estate through capital growth and the payment of dividends by companies held in their AIM portfolio.
The more traditional forms of estate planning can be complex; they will likely require the settlor or donor to take specialist legal advice and may on occasion require medical underwriting.
Risks to consider
Your client should be aware of the higher levels of risk associated with investing in smaller companies and be willing to adjust their attitude to risk in line with this.
The service will only benefit those investors with estates that could be higher than the then current level of IHT-free allowances. The service 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, your client must have held investments in a qualifying portfolio for at least two years on death to qualify for IHT relief.
There is a less readily available market for investments in smaller companies. This can make selling investments more difficult.
The advantages from investing in a portfolio of AIM stocks depend on the existing tax rules in force. Any benefits gained from maintaining AIM stocks in a portfolio could be negatively affected by any future changes to those tax rules.
Your client will need to invest at least £100,000 in the Quilter Cheviot AIM Strategy.
If you would like more information relating to our Quilter Cheviot AIM Strategy, please download our brochure or factsheet.
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