IHT & AIM company shares

The Alternative Investment Market is a not a recognised stock exchange for tax purposes (HM Revenue & Customs has stated, in response to Budget Note 37 and cl. 108 FB 2007, that it has no plans to change this designation).

Shares in an AIM listed company will, therefore, be unquoted for the purpose of inheritance tax. Business Property Relief, at 100% of value, will be available where the shares have been held for a minimum of only two years and satisfy other conditions, the most relevant of which are that the company doees not trade in land, or shares, and is not an investment company.

An investment in AIM listed shares qualifying for BPR can, therefore, be attractive to those individuals wishing to avoid IHT. Such investments can be bequeathed on the death of the shareholder, after which time the shares can be sold by the estate administrators or beneficiairies who are, in effect, exempt from IHT. BPR can also be enjoyed on the lifetime dispostion of such shares but the availability, or otherwise, of BPR is more complex.

There are investment managers which offer portfolios of AIM shares which are intended to meet the BPR requirements. These managers include Close Fund Management, NVM Private Equity, Rathbones and Rensburg Sheppards among others.