Business Property Relief (BPR) stands out as a significant mechanism for mitigating Inheritance Tax (IHT) on the transfer of business assets, applicable both during one's lifetime and upon death.
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Crafted to foster investment within the heart of the economy - trading businesses - BPR provides a pathway to 100% relief for shares in qualifying unlisted companies, including those listed on the Alternative Investment Market (AIM). For eligibility, the criteria are clear:
The Alternative Investment Market (AIM) serves as a vibrant platform within the London Stock Exchange, tailored for the ambitious, smaller enterprises seeking to share their growth journey with investors. This market's flexibility, less stringent than that of the main market, makes it an appealing choice for those looking to diversify their investment portfolio with potential IHT benefits.
AIM ISAs: These Individual Savings Accounts offer a unique blend of ISA tax benefits coupled with IHT relief, thanks to BPR. By investing in select AIM-listed shares that meet BPR criteria, investors can enjoy growth free from income and capital gains tax, with the added advantage of passing these investments to their heirs free from IHT, provided the two-year holding period is met.
AIM GIAs: General Investment Accounts holding AIM shares extend the BPR benefits beyond the confines of ISAs. This avenue offers investors a strategy to achieve IHT efficiency through careful selection of AIM shares that qualify for BPR, marrying investment growth with thoughtful estate planning.
Investing in BPR-qualifying shares through AIM ISAs and AIM GIAs represents not just a financial strategy but a commitment to nurturing the growth of trading businesses while securing a tax-efficient legacy for future generations. This approach allows investors to support the innovation and dynamism of smaller companies while ensuring their estate planning aligns with their aspirations for their family's future.
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Yes, investing in AIM shares can be riskier than investing in larger, more established companies. AIM companies are generally smaller and less stable, which can lead to higher volatility and potential losses. It's essential to carefully consider these risks and seek professional financial advice.
BPR can significantly reduce the IHT liability on your estate by making qualifying business assets exempt from IHT. This allows more of your estate to be passed on to your beneficiaries rather than being paid in taxes. Incorporating BPR into your estate planning strategy can help achieve tax efficiency and support the growth of trading businesses.
At Continuum Wealth, we offer personalised guidance on integrating BPR into your estate planning strategy. Our advisers can help you identify qualifying investments, understand the associated risks, and develop a plan to optimise your estate for tax efficiency. Contact us today to learn more about how we can help you achieve your financial and estate planning goals.
Investing in BPR-qualifying shares through AIM ISAs and AIM GIAs is not only a financial strategy but also a commitment to supporting the growth of trading businesses. At Continuum Wealth, we're here to guide you through the process, ensuring that your estate planning aligns with your aspirations for your family's future while taking advantage of tax-efficient opportunities.
To qualify for BPR, AIM shares must be held for a minimum of two years. If the shares are sold before this period, they will not qualify for the relief.
BPR provides up to 100% relief from IHT on qualifying business assets, significantly reducing or eliminating the IHT liability on these assets when they are transferred.
AIM General Investment Accounts (GIAs) hold AIM shares and extend the BPR benefits beyond ISAs. By investing in BPR-qualifying AIM shares within a GIA, investors can achieve IHT efficiency while potentially growing their investments.
AIM ISAs are Individual Savings Accounts that invest in AIM-listed shares. These ISAs combine the tax benefits of ISAs (such as income and capital gains tax relief) with the IHT relief provided by BPR. To benefit from BPR, the AIM shares must be held for at least two years.
To qualify for BPR:
Business Property Relief (BPR) is a relief from Inheritance Tax (IHT) that allows the transfer of certain business assets, either during a person's lifetime or upon their death, to be exempt from IHT, provided specific conditions are met.
The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange designed for smaller, growing companies. AIM offers a more flexible regulatory environment compared to the main market, making it attractive for companies seeking investment and for investors looking for potentially higher returns and IHT relief through BPR.
To ensure your investments qualify for BPR:
BPR applies to:
Note: This page is for information purposes only and should not be considered as financial advice. Always consult an Independent Financial Adviser for personalised financial advice tailored to your individual circumstances.