Equilibrium plans AIM portfolio to reduce IHT costs
The Cheshire-based wealth management firm said inheritance tax planning is becoming a common concern for clients who are looking for ways to reduce potential high costs.
One solution is to invest in AIM shares as, under HM Revenue & Customs rules, certain AIM and unlisted shares qualify for Business Property Relief.
This means once they have been held by an investor for a minimum of two years, they are exempt from inheritance tax.
As a result, the firm said it is looking to utilise this by setting up its own AIM portfolios, and has hired Neal Foundly to spearhead the move. Foundly joined Equilibrium as an investment analyst in August. He was previously a senior fund manager at Royal London Asset Management and spent 24 years at The Co-operative Asset Management.
Mike Deverell, investment manager at Equilibrium, said AIM can be a risky area, but he hopes the group’s own portfolios will have lower volatility than clients expect from the choppy AIM market, which is down 12 per cent year to date.
The key to successful investment in this market is careful stock selection, he added.
“We will run the portfolios in a low-risk way, and mitigate the risk of investing in AIM as much as possible by focusing on high-yielding stocks with low volatility,” he said.
“We do lots of work with clients on IHT planning. The portfolio will be a good tool for mitigating IHT, and a useful thing to have in our toolbox.”
The firm said it expects to have the new portfolios ready “within months”.
The AIM market came on to many investors’ radars following the last Budget, when the Chancellor announced a rule change allowing AIM shares to be included in ISAs for the first time, giving investors a tax break on the stocks.
Equilibrium’s announcement follows news the firm the will launch its own in-house funds next year, after encountering problems when using model portfolios on platforms.