Using AIM Stocks in Inheritance Tax Planning

updated: January 22, 2010

Inheritance tax is charged on the property you own when you die, including any gifts you make in the seven years before your death. For background information on inheritance tax please refer to the section on Inheritance Tax.

There are a number of estate planning measures that can be taken to mitigate the effects of inheritance tax on your estate and the general rule is that the earlier you start such planning the better. A number of these measures rely on making gifts (possibly into trust) to beneficiaries at least seven years before your death.

These notes deal with one estate planning measure that has really only been used by the super wealthy but which is now accessible to a much wider range of people.

This estate planning measure involves investing some of your estate in the Alternative Investment Market (AIM). Any money invested in AIM listed companies falls outside of your estate for inheritance tax purposes after just two years. Furthermore, unlike many other solutions to inheritance tax, you retain access to your money at all times.

Such an investment is very high risk and that fact alone will mean that it should not be considered by the majority of people seeking to reduce the impact of inheritance tax for their beneficiaries. On the other hand, if you do nothing, 40% of your estate in excess of the nil rate band is certain to be paid to the Revenue rather than your chosen beneficiaries.

To obtain further information please click here for our pdf Guide to Using AIM Stocks in IHT Planning.