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AIM Share Portfolio providers for IHT planning

Anyone got experience with any of the providers?

Didn't find your answer?

We may be looking ,as part of our IHT etc planning , to acquire AIM share portfolios that qualify  re BPR. To this end self assembly may be dangerous as the individuals age (shares cease to qualify etc but they do not notice etc) and buying a  managed portfolio service may , despite its fees,be a better route.

If anyone has done this for themselves or with their clients would be happy to receive  reviews/observations about any of the providers, or even just general observations re AIM. I know that individually they carry risk (hence portfolio approach) and expect if we knew we had say 20 years left other investments would outpace them such that even after 40% tax they  would have been a better investment, but as no idea how long will be invested and given only two year qualification re IHT benefit (taxpayers in their 70s)  they do seem a tenable  IHT solution.

Thoughts.

 

 

Replies (6)

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By Justin Bryant
02nd Jun 2021 17:28

Why not DIY? It ain't complicated and you'll save at least around 5% in fees & other charges I expect.

I read some research that proved dead share investors make (much) more money than live ones, implying a buy and forget approach is best, especially for the long term.

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Maytuna
By DJKL
02nd Jun 2021 17:51

Because as the individuals age their eye will likely not be on the ball, AIM shares can readily slip out of being qualifying AIM shares (Too much property, investment, etc) and you need to be on top of the reinvestment rules to ensure, with takeovers etc ,that everything still qualifies.

It is effectively why I have a window cleaner these days, whilst I can still climb ladders, and I could save money doing them myself, as I get older I may slip. (Something that I have actually done with a ladder slipping under me a few years back)

IHT planning, unless family/others are promising to manage for one (even then risk they screw up), should assume the DOF needing the IHT protection is a DOF.

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By Justin Bryant
02nd Jun 2021 18:22

I agree with your re ladders but doubt you'll find an asset manager cheap enough to make you better off (the whole industry is basally a scam - even the asset managers tell me that) even if say on a worst case scenario 2 out your DIY 12 AIM share BPR portfolio becomes non-BPR qualifying in the long term and don't forget this AIM share BPR relief could be very easily abolished in the next 5 years and that is a much bigger risk in my view.

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Maytuna
By DJKL
02nd Jun 2021 23:09

What then is the IHT answer?

For example my experience of trusts, being they are what paid for my school fees when I was younger (the fees my father charged his clients that is) is that only solicitors generally benefit from them.

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By Tax Dragon
03rd Jun 2021 07:35

DJKL wrote:

What then is the IHT answer?

Suggestion 1: don't worry about it. You'll live longer that way - maybe long enough for IHT to be abolished in favour of CGT on death or similar. Who knows.

Suggestion 2. Spend it. You've done enough for your children. (And you can tell them that you are getting 40% tax relief for your holiday/whatever... at least, you can until IHT is abolished in favour of CGT on death or similar.)

Suggestion 3: What you don't spend (and maybe you are genetically programmed to underspend) leave to the SNP/Adopt a Fox/Bladder Health/similar.

If this one-size-fits-all answer isn't for you... if, in short, you want tailored, bespoke advice, then the best advice this forum can give you is to get an accountant. (Tbh, I thought you already had.)

Ideally your accountant should know about IHT. (Choose one that does, ffs.) But don't be surprised if the advice you get includes suggestions you may not feel at ease with - it's obvious that if what you have done so far in life has landed you with an exposure to IHT, and you want to eliminate that exposure, then you have to do something different going forward. And that could be a challenge. (Or of course do something such as leave a slug to charity etc as above. Can be hugely tax efficient.)

Re AIM... Imho there's no threat to AIM without something bigger happening at the same time. Iirc OTS once suggested abolishing APR and BPR altogether, but with a reduction of the tax rates and various other measures all to happen together. Its current proposal package seems better thought through, but I've not spent that long on it - don't see much point at this stage.

What I would say is that, if you're not happy doing the AIM thing until it stops working, you probably shouldn't do it at all. That's not intended as investment advice - just seems commonsensical to me.

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Replying to Tax Dragon:
Maytuna
By DJKL
03rd Jun 2021 11:10

First- this is not for me, this is work related.

We already have the expert advice re the options available, IHT reports all done and paid for from our expert etc, we are now at stage 2, execution of some of the ideas.

However as the two estates will each, at some point, have some chunky IHT bills and as each in large part consists of investment property assets that are controlled jointly via either a partnership or held within a 50:50 limited company ,making in future accessing liquidity to pay these bills tricky, the AIM idea, at least re a part of their estates, is to stop the problem getting any worse re that segment of their estates and provide some liquid assets to each family to assist paying the eventual IHT bills.

The catch with property investment is shares/joint partnership interests etc tend not to qualify for BPR and there is no question of our departing from using property investment to provide the family incomes, the AIM thought is effectively something extra rather than an IHT solution..

As we have recently created some individual liquidity via a significant partnership property disposal the thought process is to now possibly have each family invest a decent sum within AIM shares that will be individually available to that family on second death and can be used towards paying the eventual IHT bill, the key is ensuring these will be managed for them when they get older and say when I am no longer around to assist (now less than 5 years until my likely retirement)

The portfolio managers/providers do give that management/monitoring, but for a fee, maybe as Justin says one just self selects 30-40 holdings at £20k each and some will qualify when the death occurs and some will not, the alternatives are one pays the fees to ensure all qualify and the portfolio is actively managed or one takes the view that one should invest the funds in say non AIM world trackers and hope superior performance makes up for an eventual 40% bill.

Hence the question, has anyone used any of the managers re these AIM portfolios, opinions, thoughts re their performance, VFM, etc? (To be clear I am not very keen on IFAs etc re investing, I believe I can re my own money do just as well/better, but I will not be there and I appreciate (having dealt with my father) that even if I was around slow ageing can degrade analytical skills but at a pace that one sometimes does not notice it is happening.)

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