Tag Archives: press-releases
Using AIM For IHT Purposes
AIM shares can be used to mitigate the death tax under business property relief rules. . By Nyree Stewart | Published Sep 30, 2013 Investing in AIM shares hit the headlines earlier this year when they became permitted investments within Isas, but perhaps less well known is the fact they can also be used for inheritance tax-planning purposes. Under the umbrella of business property relief (BPR) holding shares in an unquoted company can qualify for 100 per cent tax relief, providing they are owned for at least two years. For these purposes, companies listed on AIM are considered unquoted, even though they are technically listed on a stock exchange. However, as with most UK tax regulations, it is not that straightforward. Jonathan Gain, chief executive of Stellar Asset Management, explains: “Not all companies on AIM will qualify. There are a number of foreign-owned resources and mining companies which are managed and controlled in far flung places that are not necessarily EU managed or domiciled, so those types of companies won’t qualify.” That said, he points out this still leaves the investor looking to mitigate their IHT liability with more than 1,000 companies to choose from that have a UK presence or UK activity, which means they qualify for BPR. Marilyn McKeever, associate director in the private client practice at Berwin Leighton Paisner, adds: “Shares in unquoted trading companies are, broadly, exempt from inheritance tax. An individual can give such shares to a trust without the 20 per cent entry charge and for as long as the trustees hold the shares, the trust will escape the periodic and ‘exit’ charges.” But Paul Thompson, tax and estate planning consultant at Canada Life, adds that they can be quite volatile and so won’t suit every investor’s risk profile. Mr Gain agrees that the size of most of the companies on AIM are clearly not as substantial as say the FTSE 100-listed firms, but there are still some surprisingly large and well-known names such as Asos, Majestic Wine and Mulberry. “These are decent sized companies and are therefore set up to be managed well in good times and bad times and are much less volatile than much smaller companies.” On the issue of whether AIM investments are more volatile, he points out that people looking to use AIM for IHT mitigation understand that it will be a more volatile investment. But that can be managed by having the portfolio discretionally managed and can therefore mitigate the volatility by having a broad spread of holdings.” Other key points for using AIM shares as an IHT tool is to know which are the good companies and meet the management on a regular basis to understand what their plans are and to make a more informed buy or sell decision. Investing in AIM shares for IHT purposes is an alternative way to both mitigate IHT and provide some extra returns. But with all investments, the key is due diligence and understanding the risks involved in investing in a much smaller market. Nyree Stewart is deputy features editor at Investment Adviser Continue reading
When Should You Use BPR To Plan For IHT?
By Tony Mudd on Monday, 7 October 2013 Business property relief isn’t the right tool for everyone planning their inheritance but it’s well worth a look to see whether you might benefit from it. It has occurred to me that anyone who read my previous article Beware Government Bearing Gifts may have been left with the view that investing in businesses that qualify for Business Property Relief (BPR) brings with it such inherent liquidity and investment risks as to make it an area to be avoided. To use an old and often quoted adage that it would be akin to letting the tax tail wag the investment dog. If this was indeed the case then it would only be appropriate to outline the counter arguments; specifically the value BPR qualifying investments outside of an Individual Savings Account (ISA) wrapper can have. It is the case that Alternative Investment Market (AIM) shares qualifying for BPR offer a narrower range of investment options than the wider BPR investments available outside of an ISA wrapper and by definition lower diversification and higher investment risk. However I am going to look here at the tax benefits and the type of investors or situations where this type of investment may be of particular relevance to make my point. To remind readers, investments qualifying for BPR provide the simple but straightforward benefit of being exempt from Inheritance Tax (IHT) once they have been held for two years provided they remain in the hands of the investor at the point they become chargeable ie lifetime gift into trust or on death. Elderly investors or those in poor health Many IHT solutions either require investors to survive a period of seven years or rely on them being able to arrange life assurance. For elderly investors or clients in poor health the fact that the planning involving BPR is effective within two years and/or does not require medicals can be of significant value. Attorneys and deputies Where an investor loses mental capacity their financial affairs will either be dealt with by an attorney or deputy. In these circumstances due to the limitations imposed in relation to lifetime gifts (with the possible exception of Continuing Powers of Attorney in Scotland), the ability for the attorney to invest in the individual’s own hands in a BPR qualifying investment may be the only inheritance tax planning option available. Existing trusts Where the existence of trust assets will trigger a liability to IHT the selection of BPR assets as a trust investment can provide significant tax planning benefits. A liability to IHT could arise in respect of Interest in Possession Trusts or Immediate Post Death Interest Trusts on the death of a beneficiary or in respect of Discretionary Trusts for periodic (10 yearly) charges. Business owners Many investors who also run their own business will be well aware that the business itself offers the perfect shelter from IHT. The reason for this is that the business, assuming it is a trading entity, will qualify for BPR. However if and when the business is ultimately sold the protection from IHT will be lost. Through the use of BPR investments not only does this not need to be the case but the normal two year qualification will also not apply. BPR investments can also be used by husband and wife or those in civil partnerships where only one party needs to survive the two years that the investment is held and in combination with appropriately drafted wills whereby in some circumstances the tax advantages can be doubled. As with AIM shares qualifying for BPR in ISAs BPR investments outside of an ISA wrapper is not a panacea but for some clients in the right circumstances, well worth a look. Continue reading
BlueFire Renewables Adds Pellet Production To Miss. Facility
By BlueFire Renewables Inc. | October 03, 2013 BlueFire Renewables Inc., a company focused on changing the world’s transportation fuel paradigm, has integrated a synergistic wood pellet production plant to its facility in Fulton, Miss. The reconfigured design will be a 9 million gallon per year ethanol plant integrated with a 400,000 ton per year wood pellet plant. The pellets will be sold under long term contracts into the European mandated renewable energy market. “This restructure provides a more robust economic model for the Fulton facility with a significant increase in projected revenues. It has become apparent in our attempts to obtain financing for the project that the right synergies and revenue model would be needed to build this first of a kind facility,” said Arnold Klann, president and CEO of BlueFire. “The optimum use of biomass in the integrated facility strikes a much better balance of revenue with costs and a better utilization of resources. The more profitable use of capital and the enhanced security of projected revenue streams more closely match what the banks have been requiring in the very conservative and restricted credit markets.” Traditionally wood pellets are used for electricity generation and can be sold under long-term, fixed-price contracts to credit worthy utilities thereby adding financial stability to the project. Blended with lignin from BlueFire’s process, the wood pellets create a market advantage under the international mandates for renewable energy, especially for power in the European Union. BlueFire has previously announced start of construction and has completed the preliminary site work for the ethanol facility. The engineering and other development activities needed are already under way to add the pellet plant. Synergistic partners will be announced once the definitive agreements are signed. Continue reading
