Why is AIM becoming so popular?
AIM (Alternative Investment Market) shares have become popular in recent years not only because of their high yield but also because of the giving 100% relief on Inheritance tax. Although these two year shares are lucrative they are a bit of a lottery when it comes to comes to avoiding the contentious Inheritance tax as only some of the of the AIM companies are qualified to offer this relief.
If you are intending to purchase AIM shares for Inheritance tax planning then it is wise for you do some homework in order to prevent you from investing in the wrong companies, which would result in a hefty Inheritance tax bill. Some of the AIM companies offer no relief on the tax and some deliver only partial benefits, so the investor should study carefully the guidelines as set by Her Majesties Custom and Revenue (HMCR). This will allow the buyer to discover which companies offer best advantage when it comes to tax planning.
Inheritance tax relief of 100% can be realized on unquoted shares that are not listed on regular stock exchanges, shares like AIM. Of the over 1.000 companies that are AIM listed only about 700 qualify to offer 100% relief on Inheritance tax. Investors must also be aware that AIM companies may also be listed on other exchanges thereby disqualifying them from allowing the tax relief. The HMCR rules make it a bit of a minefield for the investor so financial management is vital and one should use a reputable and established Investment company. The ambiguity of the HMCR rules that are open to misinterpretation and can lead the uninitiated into incurring an unwanted letter from the taxman.
There are many companies you can approach to act for you that can answer the multitude of questions surrounding this type of investment. For example, do you have to retain your AIM shares for the full two-year period? The answer is no. You have to reinvest to keep within the HMCR rules and that is where professional guidance is imperative to keep you within the guidelines when you intend to use AIM shares for Inheritance tax planning. One can only underline the importance of seeking expert assistance.