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Our Alternative Investment Market Service

None of us like the idea that the wealth we’ve accumulated will end up in the hands of the tax man, rather than helping the next generation. One way to reduce this potential Inheritance Tax (IHT) liability is to invest in shares traded on the Alternative Investment Market (AIM). Most AIM companies qualify for what’s called Business Relief (BR), and under current UK tax rules any shares in these companies can be passed on free of IHT once you have held them for two years.

But investing in AIM shares isn’t just about saving IHT. Whilst AIM companies are higher risk than the average equity portfolio, the market has become a lot more mature, having grown in value from £37 billion in 2009 to £100 billion in 2019, so offers real potential for capital growth.

There are many ways to reduce IHT, such as gifting and trusts, and even other BR options, so if reducing your Inheritance Tax bill is something you’re looking to do, it’s worth speaking to a Financial Planner to assess your options.

Get started today

Find out how our AIM Portfolio can reduce your Inheritance Tax bill

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UK families are currently forecast to save £5.85 billion in inheritance tax over the next five years by using Business Relief.

Office of Tax Simplification (OTS) / HMRC, 2019

Why choose the Investec AIM Service

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    The support of a dedicated team

    Navigating your way around the AIM market is not easy. Not all AIM companies qualify for Business Relief, and there is greater volatility in the market. Our AIM portfolio runs on a discretionary managed basis by our specialist in-house AIM Team so you don’t have to deal with what can be a complicated Investment Management process in an already complicated market.

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    Backed by experience

    At Investec, we have a team of Investment Managers who are exclusively dedicated to providing one of the most diversified and well-managed AIM portfolios in the UK, some of whom have been managing tax-efficient investments for over 20 years. They’ll use their expert knowledge of the market, to selectively invest your money in diversified AIM companies, paying particular attention to the ability of the underlying businesses to withstand turbulence in their markets.

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    A great track record

    IW&I strives to deliver exceptional performance for our clients. On average, AIM portfolios have generated excellent returns over a number of years after management costs and fees. You can view our quarterly performance reports in the Useful Downloads section below. In addition, we not only monitor stocks on a daily basis, we also keep in regular contact with the companies we invest in on your behalf.

Ready to have a conversation?

If you’d like to have an informal, no obligation, conversation about how our AIM Service can reduce your IHT liability, please get in touch.

The benefits of our AIM Service

  • Flexible

    Life has a habit of being unpredictable and it’s possible you might need to access some or all of your money to pay for unforeseen costs or a change in circumstances. A great advantage of your AIM portfolio is that your money is not locked away. You retain control of your assets at all times, you can easily make withdrawals or conversely make further contributions if you wish. The amount you withdraw from your AIM portfolio will of course no longer be IHT free, but what you keep invested should be.

  • You can transfer existing ISAs in

    If you’ve been investing your money wisely, chances are you have built up a significant ISA pot. Depending on your overall wealth, those ISA investments whilst tax free now, could potentially be exposed to 40% IHT on your death. The good news is that you can usually transfer them into your AIM portfolio. The new holdings in AIM companies should then qualify for Business Relief, as well as being exempt from income tax on dividends and Capital Gains Tax on profitable disposals.

  • Fast

    There are many options to reduce your IHT liability, but in most instances you’ll also have to wait as long as seven years for your estate to fall outside the remit of IHT. In contrast our AIM portfolio is not only pretty straightforward to set up, it’s also a tax-efficient, flexible and cost-effective alternative that, most importantly, will see IHT relief kick-in after just two years.

Let us maximise your IHT tax-efficiency with our AIM Service

Learn how Investec can help you with smart investment strategies.

Elderly couple smiling at each other on a windy coastal lookout

During our time with Investec we have seen significant volatility in the financial markets and have always felt reassured and in no doubt that our money is being managed with due care and diligence.

John & Kath, North West

Frequently Asked Questions

Want to learn more about our AIM Service? Here are the answers that you may be looking for.

  • Who should consider an AIM portfolio?

    Investing in AIM as part of an IHT solution is not for everyone, which is why it’s important to seek advice before investing. If you have money you can set aside that you don’t think you’ll need, would like to see some capital growth rather than just capital preservation and you calculate that a considerable proportion of your wealth may be swallowed up by IHT then this could be a suitable option. Shares in AIM companies that qualify for Business Relief can benefit from 100% IHT relief but you will have to be comfortable with the greater volatility in AIM investing compared to the main market.

  • Why do AIM portfolios get IHT relief?

    Our portfolios invest in AIM companies that qualify for something called Business Relief, or BR in short. Most AIM companies qualify for BR because the government wants to encourage investment in these types of businesses. If you hold shares in AIM companies that qualify for BR for at least two years and still hold them on your death, no IHT should be due on their value. 

  • How much can I invest in an AIM portfolio?

    The minimum subscription is £100,000. There is no maximum. Additional contributions of a minimum of £25,000 (or the full annual ISA contribution) can be made at any time after the initial investment.

  • Can I exit my AIM portfolio?

    Yes. One of the main advantages of investing in an AIM Portfolio over other IHT-planning strategies is the degree of control you can retain. For instance, if your circumstances were to change, it is possible to withdraw funds. Of course, in this case, you would, however, lose the IHT relief on the amount withdrawn.

  • Are AIM investments risky?

    The AIM portfolio is a higher risk, long-term investment so we recommend you seek the advice of a Financial Planner prior to investing. AIM has less stringent rules, and AIM company shares may be less liquid than others on the London Stock Exchange. The value of shares purchased and any income derived may go down as well as up and you may not get back the full amount invested. The tax relief available may also change at any time. IW&I does not guarantee that all investments made will qualify, or continue to qualify for tax relief.

  • In what kind of companies does Investec’s AIM portfolio invest?

    We invest in AIM companies that qualify for BR. AIM is a diverse index, comprising some 900 companies worth from less than £1 million to over £3 billion (March, 2020). The market currently includes luminary brands like ASOS and Fevertree and former AIM companies that have graduated to the FTSE 250 include household names like Booker Group, Hiscox, Domino’s Pizza and Big Yellow. Our portfolio managers typically focus on the more established, larger AIM businesses.

  • What happens to my AIM portfolio when I die?

    There are three main options for the executors of the Will or administrators of the estate:

     

    1. The portfolio could be liquidated and any proceeds could be passed on to your beneficiaries. 
    2. The portfolio could remain invested for the beneficiaries. In the case of the beneficiary being a spouse or civil partner, it does not reset the two-year clock for BR and they can continue to benefit from IHT-free growth. 
    3. The portfolio could be liquidated and the proceeds used to pay any inheritance tax due on other assets, such as your home, directly to HMRC.

     

    If you died within two years of the investment and the portfolio was liquidated, the proceeds could be subject to IHT, unless it is passed on to your spouse or civil partner. 

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Private Insight

Looking back

A 60-year-old investor's advice to his 16-year-old self - It is not the sort of thing they tell you at school, but when you leave and make your way in the world as an adult, money will be part of the core curriculum

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Get in touch or find your local Investec office

Send us a message, find an office or talk directly to one of our Investment Managers. We’re here to help you

Useful downloads

AIM Portfolio IHT Service brochure
Examples of AIM companies
AIM Portfolio IHT Service Q1 2020 Report
Rate card for existing clients
Rate card for clients of external financial advisers

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