Inheritance Tax Mitigation



Capital Financial Markets run portfolio’s which currently can be utilised to mitigate against Inheritance Tax. These portfolio’s can either Invest directly into qualifying AIM shares or can be managed within an Offshore Bond within a Trust. CFM can advise on this process or work with your estate planners and manage the underlying assets.

Back round to mitigating against IHT.

Certain Investments qualify for Business Property Tax Relief. These investments fall outside of a persons estate for Inheritance tax purposes after a two-year period.

AIM shares, those shares traded on London’s Junior Stock Market, often qualify for this tax relief. There are however many companies which do not qualify which is why it would be worth considering delegating the running of this type of portfolio to us.

To qualify for BPR, you do not have to hold a particular share for two years, you just have to have a ring fenced pot of money, invested in qualifying investments for two years or more. This means that we can run a portfolio of stocks for you and buy and sell the holdings based on our analysis of the company’s investment prospects, while overall, the assets within that portfolio, should fall outside of your estate after two years.

Investment Philosophy

Our emphasis is to invest in companies which are developed, have a sound balance sheet, good cash flows and strong management. Where possible we do try to avoid concept companies. However, the AIM market has a lot of very small companies so we do have to consider these for inclusion in our larger portfolios and of course some of these may offer good growth prospects. The result is that the portfolios tend to have around 30 holdings in large established companies and then a longer tail of smaller companies in order to mitigate the risk.

Capital Financial Markets use the Numis Smaller companies series of Indices as comparative, indicative benchmarks for our portfolio’s.

If you need tax advice regarding your own tax position you should contact a qualified tax specialist. We are able to recommend a panel of such experts if you require.

0203 697 0560

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Using AIM stocks in the manner described above may well depend on your individual circumstances and may be subject to change in future. You should seek advice if you are in any doubt.

Offshore Bonds and Gift Trusts

Many providers such as Canada Life offer Offshore Bond products. These can allow money essentially to be held offshore and to avoid tax during the period it is held offshore. If this set up is complimented with a Discounted Gift Trust or other types of trust, then the assets can also avoid IHT. This product is often used by Estate Planners such as Solicitors. Many of these offshore bonds allow an Investment Manager such as ourselves to manage the assets held within the bond so that you can have a bespoke portfolio rather than model portfolio. Please contact us for specific information relating to these.