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Are all shares on the Alternative Investment Market (AIM) exempt from Inheritance Tax?
THERE is a belief that all shares on the Alternative Investment Market (AIM) are exempt from Inheritance Tax. I am sorry to say that whilst a lot of shares do qualify, there are a lot that do not.
The AIM market was intro-
duced as a sub-market to the London Stock Exchange in 1995 and allows smaller, potentially more volatile, companies to hold and trade their shares in a more relaxed regulatory environment. The sought-after Inheritance Tax relief (actually 100% Busi- ness Property Relief (BPR) from Inheritance Tax) flows from the original HMRC position that allows someone inheriting a business to do so without having to sell the business to pay inheri- tance tax. A further rule change in 2013 now also allows AIM shares to be held within ISAs which has increased the AIM share popularity. This is because whilst ISAs are not in them- selves IHT-free, they are a popu- lar method of holding AIM stocks as you can switch stocks without the potential worry of a Capital Gains Tax exposure. There are two sides to the requirements before an AIM share will qualify for the 100% Business Property Relief. First- ly, on your side as investor, you have to hold the shares consis- tently for two years prior to death in order to attract 100% BPR. This is a period of two years which need not be com- plete tax or calendar years. Fol- lowing the original HMRC plan that people should also have a direct stake in a business, the AIM shares must also be held by you personally and not via a fund (holding shares via a stock- broker usually counts as being held by you personally). From the company side, whilst the AIM market attracts
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companies in various fields, only certain companies will attract the 100% BPR. Specifi- cally, to attract BPR, the com- pany activities must: Not consist wholly or mainly
of dealing in land or buildings; Not consist wholly or mainly of making investments; Not con- sist wholly or mainly of dealing in stocks and shares; and finally The company must also not be listed on another stock exchange. Anywhere. When seeking a suitable investment to attract 100% BPR, you should read the small print of what the company does both on purchase and at any time fol- lowing in case, for example, the company decides to expand into a new country, list its shares locally and therefore lose its IHT relief in the UK whilst still retaining its AIM status. Should a particular holding fail, and you are aware of it, there may still be time to switch out of that holding and into another and restart the two-year clock. A decent stock- broker will be able to guide fur-
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ther on this and companies are also required to maintain a list- ing of key data such as their main activities on their websites if you are doing your own research. If you decide to make a gift (or
a transfer into a settlement) of AIM shares and then fail to sur- vive the seven-year period, whether or not the shares will ultimately attract BPR is deter- mined by the company activities as at the date of passing and not as at the date of gift. As there is no official list of
which companies do or do not qualify for BPR, given the amount of IHT potentially at stake HMRC do scrutinize claims carefully to ensure that an investment qualifies. Although in recent times, the popularity of the Alternative Investment Market for compa- nies may be waning (partly due the shortage of approved Nomi- nated Advisors available to the companies, themselves) it does still hold its attraction for some investors with the potential 100% Business Relief an added bonus. You should remember of course that investing on the stock market carries inherent risks, and you should take appropriate investment advice before doing so. Furthermore, whilst BPR is currently avail- able, it would not be that compli- cated for the government to withdraw 100% IHT relief on AIM shares in the future. For now, however, if you aim
correctly, you can still hit the IHT target. For further information on
any of the above points, please do not hesitate to contact Robin Beadle at Ensors Chartered Accountants, Saxmundham on 01728 603005. This article seeks to address general business and financial issues and due care has been taken in its preparation. Ensors cannot accept responsibility for loss incurred by any person, company or entity as a result of acting, or failing to act, on any material in this publication. Specialist advice should always be sought in relation to your par- ticular circumstances.
JULY was another busy month for fundraising and fostering. The sun shone at the Hevening- ham Show and the Royal Brit- ish Legion WW1 Commemora- tion event in Woodbridge. We were pleased to meet many gen- erous supporters who came to see us on our stands. Our foster carers continue to be stretched, with extra room having to be found in order to take in litters of unwanted kittens. We know that one of neighbouring branches has had to close its waiting lists due to being over- whelmed with the high number of cats and kittens needing to come into care. We are again appealing to everyone who has cats to ensure they are neutered. There are many myths sur- rounding castrating and spay- ing - all of which are untrue; there are only benefits. As well as helping control unwanted lit- ters, neutering reduces the risk of fighting and resulting infec- tions, reduces the risk of disease and some cancers and limits straying. It is the responsible thing to do if you own a cat. The branch is able to help those on limited incomes and or benefits with the cost of neutering. Call us to find out more. Feline behaviours: Why do
cats knead their owners with their claws? When kittens are first born they are totally depen- dent on their mother for their nutrition. When they suck at their mothers’ teats they tread with alternate front paws at her body to stimulate the flow of milk. If your cat is kneading on your lap or chest when you have a cuddle this shows that it asso- ciates the intense and secure nature of your relationship with that of its mother when it was a tiny kitten. Some cats will take the process one step further and dribble uncontrollably as they anticipate the milk feed that kneading usually produces. Cats generally grow out of this behaviour after they are weaned, but a few will retain it into adulthood, particularly if they are with someone with
Love Your Local Market
PLEASE don’t forget about the Woodbridge Thursday market – Love your local market! We have all your favourites including fresh fruit and veg, cut flowers, plants and bulbs, artisan breads and cakes, cheeses and pies and handmade toys and cards. New for this summer we also have the Silver Rocket Café serving Gluten free, vegan and veggie food and treats! Please come and see us on the
Market Square, outside the Shire Hall in Woodbridge every Thursday from 8am until 4pm.
whom they feel safe or when they are allowed onto a fluffy cushion or blanket. Event Dates: Come and see
us at: Southwold Antiques Fair - Sunday 5th August, 10am to 4pm; Westleton Barrel Fair - Sunday 19th August, 11am to 5pm; Orford Flower Show - Saturday 25th August, 1.30pm to 5pm. Cat Quote: ‘Tobermory
looked squarely at her for a moment and then fixed his gaze serenely on the middle distance.
It was obvious that boring ques- tions like that lay outside his scheme of life’; from Tober- mory by Hector Hugh Munro, better known as, Saki. I am sure all cat lovers will be able to recognise that look! Looking for a home: This
very handsome, large chap is Willoughby who is about three years old. He was brought into care, un-neutered, scared and with fight wounds on his back. Now fully recovered, he has been neutered and with lots of
TLC a truly loving boy has emerged. Arrange to meet him soon if you are looking for a new feline companion. See our website: framandsax.
cats.org.uk or telephone 01728 723499 for more information about adopting cats in our care; event dates; cat-care leaflets; how to become a volunteer fundraiser or fosterer and other ways you can support us. Also find us on Twitter, Facebook and YouTube.
You want Damages? But there has been no loss!
UNSURPRISINGLY, the con- cept of “damages” means ex- actly what it says on the tin. You must have suffered dam- age and be worse off as a result of the accident or wrong-doing. But not always! In 1974 a case involved a
breach of a covenant not to develop an area of land in a par- ticular way. Wrotham Park is a Palladian mansion house, just inside the M25, belonging to the descen- dants of the ill-fated Admiral Byng. Various parts of the estate were sold for development, but always subject to a covenant controlling the exact layout of the houses. A developer acquired an out-
lying part of the estate and obtained planning permission to construct a road and fourteen houses, but these did not comply with the layout covenant. This was undeniably a breach. The Byng estate were entitled to seek damages or even an injunction. However, the judge declined
to order an injunction that the houses should be pulled down, as that would be mindlessly
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punitive. Yet, on the other hand, there was no measurable finan- cial loss to the estate, as they fully expected something to be built. The solution was to award a slice of the developer’s gain to the estate, simply to show that you should not make a profit out of a barefaced breach. The assessed portion was five per- cent of the developer’s gain. Recent employment cases
have sought to follow this pat- tern, where an employee, after leaving a company sets up a competing business next door, despite being under a covenant
in restraint. The courts have declined to
award Wrotham Park damages in such cases, presumably because there would be unquan- tifiable future on-going damage. Instead an injunction closing down the offender would be the proper remedy. For further advice about cov-
enants and damages contact Kate Ruston at:- Messrs Pulham & Co, Egmere House, Market Place, Saxmundham, IP17 1AG Telephone (01728) 602084 or e-mail
kjr@pulham.co.uk
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AUGUST 2018 0505825
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