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AIM Shares in ISA for IHT Relief
DCB
Posted: 23 July 2017 19:50:58(UTC)
#1

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Thinking of investing in AIM shares within our ISAs to secure Business Property Relief...
Seem to be two routes ...Buy an AIM IHT fund or buy individual shares.
Keen to do it my myself rather than pay commission to stockbroker but tricky to be certain which shares qualify and keeping within the rules.
Reckon I can identify a few sound businesses on the AIM
Does anyone have any experience / advice please?
Thanks
D
Amos
Posted: 27 July 2017 12:20:36(UTC)
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Hi D.

I've started down this path recently. Seems to me that a straight 40% gain is a good starting point. And AIM has such potential if you get it right. However I'm no expert on it, so how to find the right shares??

I don't know if I can get away with saying this on another site, but I use the bulletin boards on London south east (LSE). I made some mistakes, but also one or two good ones, and noticed on the good ones that there are one or two posters who are very, very experienced and can do the numbers better than I ever could. Retired city professionals who do it for the interest. AIM is so much less researched that for those who know what they are doing there are good gains to be made, and some good dividend paying shares also. And the institutions hardly come there as the market caps are too small to interest them: but when something gets interesting and they begin to of course the SP gets even more interesting.

I'm afraid I cheat and largely follow one poster around! If he goes in/tops up I probably will too. You can click on a poster name and it goes to 'member info' and will show all his posts. This guys board name is Rivaldo. A retired city man, whose record looks amazing, but more importantly reading his posts I have learnt so much about what to look for. Not all his shares are IHT qualifiers, some for instance are holding companies, some not on AIM, and one or two I personally don't want to invest in for whatever reason. He has quite a variety of holdings, so you can pick and choose. He keeps up with the news flow amazingly, so you can be EXTREMELY LAZY (!!) and STILL really know what's going on with a share and can make all your own decisions. He says himself he tends to be a very long term holder of shares, so this is not a trader. The board I first noticed him on was IQE, which did nothing for a long time but now.... well, check it out for yourself. I bought at less than 18p. Still holding, and expect to for life. :) He's almost the only poster on some boards, which shows you may really get in at the bottom. GMAA is an example - search that and you'll see what I mean.

I've gone on a bit. He does this on a public board so I don't suppose he would mind me saying this. Just helped me a lot - and if I follow him it'll push the price up that little bit so it should benefit him. And if you check him out and do likewise you'll benefit me too! :)

There's a lot of rubbish - some of it nasty - posted on some boards. I reckon now it's usually a sign of a share to avoid: it will be a get-rich-quick gamble. Never seen this guy get involved in the rubbish.

All the best.

PS. I suspect there are 'AIM darling' shares that all the IHT funds buy. Probably very stodgy, but also risky because a whole crowd is following one another. Personally that makes me nervous. I prefer to look for posters I respect who really know their stuff, look at what they're in, and then - of course - DMOR.

PPS! Re-reading your post I realise that your issue is more one of finding what qualifies than what to buy. Sorry for the waffle then, but I'm leaving it up in case it helps someone else. I suspect most people don't really have the skills to pick their own shares.

With regard to finding what qualifies I do check for dual listings and read the guff to see if it is a holding company, and if necessary I would contact the company itself as if they don't know they really should. But I gather it is all a bit of a gamble with the tax people anyway. If it looks a good investment I buy it anyway and reckon it's worth it anyway. But I should save some tax, and that will be great. That is, if they don't change the rules.
Catch The Pigeon
Posted: 27 July 2017 12:36:22(UTC)
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Take a look at Octopus

100% worth paying the experts a fee to buy the right investments with this one.
DCB
Posted: 27 July 2017 16:08:10(UTC)
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Thanks Amos...good advice taken on board
I am a sceptic by nature and the BPR relief is such an amazing deal I suspect it has pumped up the prices on some of the everyday AIM names so I need to dig a bit deeper.

Catchie.........Yes the head says entrust the job to Octopus but the heart says £10,000+ initial set up fee and £10,000 + a year management fee..........will Octopus really do that much better ?, all fishing in the same pond , I can read a set of accounts and have the time.
I do admit the BPR qualification rules are a bit of a nightmare....

D
1 user thanked DCB for this post.
Amos on 27/07/2017(UTC)
Catch The Pigeon
Posted: 27 July 2017 16:12:48(UTC)
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DCB;49275 wrote:
Thanks Amos...good advice taken on board
I am a sceptic by nature and the BPR relief is such an amazing deal I suspect it has pumped up the prices on some of the everyday AIM names so I need to dig a bit deeper.

Catchie.........Yes the head says entrust the job to Octopus but the heart says £10,000+ initial set up fee and £10,000 + a year management fee..........will Octopus really do that much better ?, all fishing in the same pond , I can read a set of accounts and have the time.
I do admit the BPR qualification rules are a bit of a nightmare....

D


Will cost you a lot more if you get it wrong.
Amos
Posted: 27 July 2017 16:23:44(UTC)
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I find it hard to understand why the revenue don't publish a list of qualifying/non-qualifying AIM shares. Isn't part of the point of the BPR exemption to encourage investment in smaller companies?

But as far as I know they don't and won't.

A
Alan Selwood
Posted: 27 July 2017 20:01:24(UTC)
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Simon Thompson in Investors Chronicle is also a good source, and articles by John Lee every month or two in the FT Saturday Money section.

2 users thanked Alan Selwood for this post.
Amos on 27/07/2017(UTC), gillyann on 02/08/2017(UTC)
DCB
Posted: 01 August 2017 17:08:49(UTC)
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AIM shares for BPR
Thanks to all for good contributions following my original post.
Given the initial fees , annual fees and loss of control I still believe it could be worth a DIY approach.
It does not have to be 100% on day one , hopefully at 66 I have time to convert our ISAs to AIM shares over a period of time.
Are any other folks ( 2 or 20) interested in forming an informal AIM for BPR group to share research and ideas via the website. If all goes well maybe even visit the odd business.
Let me know here with a email address and I will be in touch
David
P L
Posted: 02 August 2017 08:00:02(UTC)
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Father-in-law has very recently started an AiM ISA with Octopus.
Purchased it through clubfinance.

When he first decided on doing this I did a bit of investigation about how easy it was to pick individual shares yourself. The main sticking point here is there is nothing that instantly flags up whether or not a share is potentially eligible for BPR. Neither Stockopedia or Sharescope provide any indicators (albeit this has been asked for a number of times).

There is a website http://aimsearch.investorschampion.com/ that allows you to check (for a fee of course) whether a AiM company is likely to meet the BPR rules. I also say potentially as the assessment is only made when you put in a claim for BPR with HMRC. The fund managers effectively have no come back other than reputation if it all fails.

However given BPR can easily be lost you'd have to monitor the investments closely. The IHT/BPR rules do allow you to switch assets without losing the BPR provided you switch before the relief is lost. For this reason having a manager is possibly a sensibly option.

Interestingly when you look at the fund managers websites you'll find absoultely nothing about how successful they've been at the primary role of the funds they are selling.

As it happens I've put in a freedom of information request with HMRC asking how many claims for BPR against AiM shares they've had and how many rejects they make. Nothing back - which i'm sure is a big surprise.

One option I'm trialling (by running a mirror portfolio) is whether it is possible to simply make an initial investment say through Octopus for the minimum subscription and then simply piggy back on their portfolio selections. My suspicion is the price movment following loss of BPR would kill any possible savings you might make in AMC. At the end of the day the investment needs to work as an investment even if you hope to mitigate IHT.
3 users thanked P L for this post.
gillyann on 02/08/2017(UTC), Tim D on 02/08/2017(UTC), RBLEZ on 03/08/2017(UTC)
Tim D
Posted: 02 August 2017 12:34:02(UTC)
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P L;49480 wrote:
As it happens I've put in a freedom of information request with HMRC asking how many claims for BPR against AiM shares they've had and how many rejects they make. Nothing back - which i'm sure is a big surprise.


I just took a glance at the HMRC area of the "What do they know" FOI site... only stuff on BPR I could find was this thread (someone asking for a list of qualifying companies, amongst other things): https://www.whatdotheykn...luation_for_inheritance . HMRC response https://www.whatdotheykn...%20FOI%20reply.pdf.html pretty much in line with the discussion here.

They're supposed to respond to you in 20 working days; be interesting if they come back with some concrete numbers. That the information would be too onerous to collect would be the expected excuse if not.
Alan Selwood
Posted: 02 August 2017 22:12:59(UTC)
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All pretty pathetic!

No doubt they fear that they might set a precedent, and are shuddering with horror at the fact that they might commit this bureaucratic cardinal sin.

Nobody else would be allowed to get away with it.
Jon Snow
Posted: 02 August 2017 22:59:53(UTC)
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DCB,

I'm not sure why you want to hold AIM shares in an ISA wrapper. The only reason I can see is if you plan to actively trade the AIM shares, which overcomes your BPR aim, otherwise the ISA wrapper may be a distraction.

AIM shares, generalising to make a point, either crash and burn (Quindell etc) or grow like Topsy (Fevertree etc), they don't generally throw off big dividends, they generate capital gains/losses.

If the AIM shares are for BPR and IHT purposes you won't be selling them, so CGT won't be an issue.

AIM is a risky market, many good companies, a few unicorns and a lot of snake oil sellers. You have to have the skills and knowledge to sort the wheat from the chaff, what's the failure rate for start ups within the first 5 years, about 55%.

I looked at this area for my old mum and decided it was too risky, with IHT you know it's 40%.

If you think you can spot the winners....go for it and save the annual ISA investment for boring stuff that you can leave to each other rather than the kids.
3 users thanked Jon Snow for this post.
gillyann on 03/08/2017(UTC), RBLEZ on 03/08/2017(UTC), Tim D on 03/08/2017(UTC)
Alan Selwood
Posted: 03 August 2017 08:17:34(UTC)
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Since some AIM shares may go bust, CGT may come into play when you try to offset losses on an AIM shareholding not held in SIPP or ISA against another non-AIM holding that you sell at a large profit.

Like any other shares, you may want to SWITCH from one AIM company to another, and within an ISA this does save a lot of tax-related paperwork.

I would rather hold all equities (and even bonds, if I wanted to have any) in an ISA rather than outside it, so that whatever the dividends received or gains crystallised, there is no self-assessment reporting required. Although the savings and dividend exemption limits may be 'wasted', if the income is not taxable anyway, because generated within an ISA, what does it matter?

As far as IHT is concerned, I believe that just retaining all the transaction histories should be enough to ensure that any attempt by my executors to make IHT saving through use of AIM shares for BPR can be substantiated.

I'll let you know whether I was right after the event!! ;)
2 users thanked Alan Selwood for this post.
Jon Snow on 03/08/2017(UTC), RBLEZ on 12/08/2017(UTC)
Micawber
Posted: 10 August 2017 06:17:27(UTC)
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P L;49480 wrote:
Father-in-law has very recently started an AiM ISA with Octopus.
Purchased it through clubfinance.

.......


Which companies have they selected for this portfolio?
DCB
Posted: 10 August 2017 08:38:23(UTC)
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Like Alan S the only downside in holding shares within an ISA wrapper may be using capital losses. Trading within the wrapper is not a problem....Once BPR is established I have 2 years to reinvest any sales proceeds so trading is not a problem.
The icing on the cookie is BPR after 2 years so the kids get 100p not 60p in the pound. OK Aim shares can go bad but then so can any others........IHT tax relief will fund the odd bomber...
I generally prefer to invest in Index trackers but sadly not possible for IHT planning.

I feel the Market Risk may not be the biggest problem..........that for me is ensuring the stock qualifies for BPR under the AIM rules and that status does not change over time.
My strategy is to research carefully , have a small number of solid holdings and keep a close eye on them
2 users thanked DCB for this post.
Tim D on 10/08/2017(UTC), RBLEZ on 12/08/2017(UTC)
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