Private trading companies
There is a range of discretionary services available, which will find and allocate capital to private trading companies.
A broad range of potential companies can be accessed through such discretionary services, from property lending to renewable energy.
Most of the solutions available aim to target consistent returns of 3 to 5 per cent a year, and offer the ability for investors to make ad hoc withdrawals, should their circumstances change.
Aim solutions
In 1995, the London Stock Exchange launched a junior stock market for small, growing companies called the Aim.
Since 1996, Aim shares have been classed as unquoted, and therefore private investors have been able to hold shares in Aim-listed companies and pass them on free from IHT, provided the company qualifies for BR and the investor has held the shares for at least two years when they die.
Aim IHT solutions allow investors to access growth companies, which within a portfolio will seek to deliver good investment returns through capital growth and dividends, as well as providing IHT relief if held for more than two years.
In 2013, changes to Isa rules allowed Aim-listed shares to be included in an Isa, which subsequently permitted many facing an IHT liability to transfer some or all of their current Isa pots over to an Aim Isa.
Investors continue to benefit from the capital gains tax and income tax exemption, but once held for two years, the asset would also be classed as IHT-exempt, as long as still held on death.
BR vs gifts and trusts
Both solutions are widely available, and provide a sensible alternative to gifting and trusts, particularly now with such an uncertain financial climate. However, individuals will need to find the right solution for their circumstances.
Here is a useful summary of the relative pros and cons of the various solutions:
| Pros | Cons | |
| Gifts |
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| Trusts |
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| Aim |
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| Unquoted companies |
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The importance of holistic IHT planning
Death and taxes are the only certainties in life. Yet the reality is that relatively small numbers of clients are still properly planning for the future.
Research from LV earlier this year suggested only 41 per cent of the UK’s 30mn parents who want to leave wealth in their will have done so, and 20mn in the UK have not written a will at all.
No IHT planning will be effective if clients are not clear about what they want to happen in the event of their death.
And that means as a first priority, making time to develop a will.
