TaxThe Treasury recently announced that AIM (Alternative Investment Market) shares will be allowable assets within an ISA.

This is an important development for those investing to avoid Inheritance Tax (IHT). Typically, if you have excess assets within your estate and want to make plans to avoid your beneficiaries having to pay 40% IHT there are a variety of options to give your money away.

However, not everyone wants to give their money away. The number of options open to you to make plans to avoid inheritance tax and keep control of your money are minimal.

These new ISA rules have just created such a way. Certain AIM shares will be eligible for what is known as Business Property Relief. The rules are complicated but what is important is that after holdings these shares for two years, they fall outside of the value of your estate for IHT purposes.

What is more, they can be held within an ISA and benefit from virtually no taxes for the duration they are held by you.

One note of caution though, not all AIM shares will qualify for this relief and the qualification rules to become a company that benefit from Business Property Relief are, again, complicated and possibly temporary. That is, relief is offered at the point the shares enter the probate process. Therefore if HMRC decides the the shares within an ISA do not qualify at that time then they will fall inside the estate for valuation purposes. So there are no hard and fast guarantees with this one, but it is an attractive option in the right situation.

Photo Credit

Investor Profile Contact Details

Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on jaskarn@investorprofile.co.uk