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IHT Excluded Investment Portfolio |
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Who is it for?
Investors who wish to reduce their taxable estate but do not wish to make gifts or dispositions. They should have no less than £50,000 to invest.
The proposed strategy provides the opportunity for clients to realise capital growth on the invested amount at the same time as reducing the potential Inheritance tax (IHT) liability.
The assets invested remain under the control of the client and remain available to them should they require funds in the future.
What does it do?
A suitable investment will place your client’s assets outside their estate for IHT purposes after 2 years of holding the investment and also provides the potential for an investment return.
How does it work?
The client invests in a bespoke discretionary portfolio selected from qualifying stocks listed on the Alternative Investment Market (AIM) or OFEX.
A portfolio of such investments will qualify for both Business Asset Taper Relief and Exemption from inheritance tax (IHT) once held for 2 years. The key benefits are that the client has the opportunity to: (i) Retain the ownership of the asset whilst still enjoying IHT efficiency. (ii) Enjoy accelerated taper relief, meaning only 10% CGT, on disposals made after 2 years. Further EIS tax benefits are available where subscription for ‘new’ shares is undertaken. Types of Investment available
Most shares listed on AIM and OFEX will qualify although some financial securities are excluded. CostWe have made arrangements with an appropriately regulated blue chip specialist portfolio manager who specialises in providing this service to clients of IFAs on a commissionable basis.
Fees are as follows:
Initial fee 5% of funds invested. (2% to IFA)
Management fee 2% of fund value (0.5% trail to IFA)
Dealing charge 0.5% on sale of traded securities.
Risks
Tax Risk – Low. The planning relies on a positive provision within UK legislation therefore this is not aggressive tax planning.
Investment risk – High. Although this is mitigated by utilisation of a diversified portfolio.
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