IHT inheritance tax AIM

The latest government figures on inheritance tax published by HMRC will come as no surprise to many, but serve to underscore the opportunities afforded by Business Relief.

Statistics from HMRC show that IHT take reached £5.4 billion in the 2018-19 tax year.

The figures came up during this week’s AIM Showcase events in Exeter and Colchester, rounding off our series of events looking at some of the top investment managers’ AIM offerings.

All of those presenting have funds that offer their clients the chance to benefit from 100% inheritance tax relief through Business Relief, while also giving investors the opportunity to put their money into some of the UKs most exciting growth businesses that are quoted on the AIM market. Everyone knows today about the likes of Fever-Tree and Asos, but the chance to get involved in companies like these before they become big names is what many investors will be excited by.

And while the tax tail should never wag the investment dog, clearly the continuing rise in IHT take by the government will be encouraging investors to look at different ways to invest their money.

As the managers in Exeter explained, interest in these types of products is expected to grow over the coming years, as more people are affected by IHT. HMRC’s figures published last week also showed that 28,100 deaths in the UK resulted in an IHT charge in 2016-17 (the latest year for which statistics are available) – a 15% increase on the previous year. While that accounts for just 4.6% of all UK deaths in that year, it is clearly a growing number, meaning the benefits of Business Relief should be an option for more and more investors.

The managers were also positive about the prospects for both the AIM market itself and the future of Business Relief, pointing out the latter’s importance in supporting growth companies. While much has been discussed about the potential impacts of Brexit, in fact the biggest concerns for many in the Showcases we have held across the country have been around what a new government might do to both existing tax efficient investments and investor opportunities more broadly.

Indeed, one of the first questions in Exeter was around what a Jeremy Corbyn-led government might want to do in this area. It was a particularly apt question on the day that the Supreme Court had ruled against the government’s prorogation of parliament, once again putting politics at the heart of the news.

However, the managers tended to agree that, while nothing can be taken for granted in the current political climate, officials within Treasury and the government more widely tend to understand and recognise the benefits that Business Relief and the AIM market provide to the overall economy. Therefore, the managers remain optimistic that these benefits will speak for themselves and provide future governments with a positive story and good reason to maintain and enhance these facilities rather than abolishing them. Furthermore, it was pointed out that the threat of the tax reliefs being taken away will always be there, whatever government is in power. The managers suggested that this is another good reason why AIM investments need to stack up foir investors even without the tax reliefs.

This positivity regarding the future of the market also came through in our third AIM Industry Report, which was published to coincide with the recent Showcase series and provides a snapshot of the current AIM market.

To find out more about the AIM market and to get a clear snapshot of what has been going on in this area over the past 12 months, simply click here to download our AIM Industry Report 2019 free of charge.

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