The majority (85 per cent) of advisers plan to increase their use of Aim-listed companies that qualify for business relief to help clients reduce their inheritance tax liabilities, research from Time Investments has revealed.
According to Time, there is a “growing popularity” of Aim as an IHT planning tool, with 72 per cent of advisers saying that between 40 and 60 per cent of their clients aged over 50 currently hold business relief qualifying Aim companies in their investment portfolio.
This is a “significant” increase compared with three years ago, when only 43 per cent reported the same percentage of clients hold BR qualifying AIM stocks, and 39 per cent said less than 40 per cent of their clients held them.
The findings come as inheritance tax receipts reached a record £7.1bn in 2022/23, compared to £6.1bn in the previous financial year.
Time investments head of equity funds, Raymond Greaves, said: “Our research shows that advisers and wealth managers are increasingly turning to Aim as a tool to help mitigate the ever-increasing IHT burden.
“Using business relief qualifying AIM investments looks like an untapped opportunity, as many investors over 50 do not yet have these holdings in their portfolios.”
The research revealed the top five most important factors advisers and wealth managers look for when choosing different Aim funds and services.
Of primary importance is genuine active management through a qualitative investment approach, the second is funds that invest in larger and more established companies, and the third is funds that invest in profitable and dividend paying companies.
This is followed by an Aim investment track record of over five years and services that invest in business relief qualifying companies and therefore offer the potential IHT saving.
The research also showed that 95 per cent of respondents have conducted IHT planning on an investment platform and that 92 per cent would consider using an Aim business relief service on platform in the future to reduce clients’ IHT liabilities.
tom.dunstan@ft.com
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