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INVESTMENT STRATEGY QUARTERLY

This may be on top of your annual £3,000 exemption. You can also INVEST IN AIM (ALTERNATIVE INVESTMENT MARKET)
make unlimited wedding gifts of £1,000 to any non-related person SHARES
each tax year. AIM is a sub-market of the London Stock Exchange which allows
But, if you die within seven years of making a gift in excess of your investors access to smaller companies.
nil-rate band of £325,000, IHT will be payable on a sliding scale as Investing in qualifying AIM shares have IHT benefits, since many
shown below: stocks on London’s junior stock market can qualify for Business
Relief. However not all AIM shares qualify (as approved by HMRC)
Time between making the Tax applied to the gift and you must hold the shares for at least two years to be exempt
gift and death from IHT. They also need to continue to be qualifying upon death.
0 - 3 years 40% AIM companies are smaller, less established companies and share
3 - 4 years 32% prices can be volatile.
4 - 5 years 24% The UK Government’s decision in 2013 to allow AIM-listed shares
5 - 6 years 16% to be held within Individual Savings Accounts (ISAs) means that
6 - 7 years 8% investors can now hold BR-qualifying shares within a tax-efficient
7 years 0% ISA wrapper.
Source: https://www.gov.uk/inheritance-tax/gifts
SET UP A TRUST
Another option is for a gift to be exempt as a gift out of surplus Setting up a trust to hold your assets could be another option to
income, however the following conditions must be satisfied: consider.
• The gift must be part of your normal (i.e typical or habitual) The trustees control the assets, rather than them being passed
expenditure; and onto the beneficiaries right away. This may be useful if you are
concerned about gifting assets to a loved one who is perhaps not
• The gift must be made out of your after tax income taking one renowned for their financial prudence, or perhaps to minors.
year with another; and
Important to note that trusts can be expensive to run and subject
• After allowing for all other transfers of value forming part of to tax charges, which together with their complexity makes them
your expenditure, you are left with worthwhile in only a few circumstances.
sufficient income, in order to maintain your usual standard
of living. TAKE OUT AN INSURANCE POLICY

In order to satisfy that the gifts were part of your normal You may purchase an insurance policy that covers IHT liability,
expenditure, it will be necessary to show a commitment to make these are generally written in trust.
regular gifts as part of a settled pattern of giving.
This route offers you peace of mind, that your beneficiaries will
not struggle with a huge Inheritance Tax bill when you die. You are
PUT IT IN A PENSION effectively paying at least part of that bill while you are alive
The main purpose of a pension is to provide you with income in through your monthly premiums, which can sometimes be
retirement. But you can also nominate beneficiaries should you substantial. As you might expect, the older you get the higher the
pass away before you receive it. The nominations must be premium. Though this will vary depending on your underlying
submitted directly to your pension provider, and generally IHT is health.
not payable.

If you die after the age of seventyfive your beneficiaries will need DONATE TO CHARITY
to pay income tax on the money they take out of the pension. The If you leave any part of your estate to charity you receive a
rate depends on whether they are a basic (20%), higher (40%), or proportionate deduction on your IHT rate.
additional rate (45%) taxpayer.

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