Inheritance tax
Planning ahead to protect your estate

Business Relief (BR) is a government‑approved relief that may reduce the value of certain business assets for IHT purposes after a minimum holding period, typically two years. BR‑qualifying investments are high‑risk and may include:

• Shares in qualifying unlisted companies
• Certain trading business assets
• Some AIM‑listed shares

BR is not guaranteed, and qualifying status can change. These investments can be volatile and may be difficult to sell.

AIM IHT portfolios invest in Alternative Investment Market companies that may qualify for Business Relief. After two years, these holdings may become exempt from IHT, but this is not guaranteed.

Key considerations:

• AIM shares can be significantly more volatile than mainstream equities.
• Companies may fail or lose BR‑qualifying status.
• Capital is at risk and liquidity may be limited.

These portfolios should only be used where suitable and managed by specialist discretionary fund managers.

A discretionary trust allows trustees to decide how and when beneficiaries receive assets. They can offer flexibility and potential estate‑planning benefits, but:

• Tax rules are complex and may involve ongoing reporting.
• Trustees must act in beneficiaries’ best interests.
• Professional legal advice is often required.

A bare trust gives a named beneficiary an absolute right to the trust assets. They are simple and often used for gifts to children, but:

• Beneficiaries gain full control at age 18.
• Assets are treated as belonging to the beneficiary for tax purposes.
• Suitability depends on your objectives and family circumstances.

A loan trust allows you to lend money to a trust rather than gifting it outright. This can reduce the IHT impact on future growth, but:

• The original loan remains part of your estate.
• Access to capital is limited to loan repayments.
• Investment risk applies to the trust assets.

A discounted gift trust (DGT) allows you to make a gift into a trust while retaining a fixed level of withdrawals. The “discount” reflects the value of the retained income stream, potentially reducing the initial IHT liability.

Important considerations:

• The discount is not guaranteed and depends on underwriting.
• Withdrawals reduce the value of the trust over time.
• DGTs are usually used with investment bonds, which carry investment risk.

A family investment trust is a trust structure designed to hold and grow investments for future generations. They can support long‑term planning but:

• They involve trustee responsibilities and potential tax charges.
• Investment risk applies.
• Suitability depends on family dynamics and objectives.

Writing life insurance or whole‑of‑life insurance in trust can help ensure the payout is:

• Outside your estate for IHT purposes
• Paid quickly to beneficiaries
• Available to help meet an IHT liability

Trusts involve legal responsibilities, and suitability depends on your circumstances.