AIM shares, ISAs and Inheritance Tax

AIM shares, ISAs and Inheritance Tax

Following recent changes in the taxation benefits of ISAs and Inheritance Tax, we wanted to expand on certain AIM shares which benefit from Business Property Relief or BPR and can now be held within an ISA account. Qualifying AIM shares benefit from BRP once they have been held by an investor for a minimum of two years, after this period they are exempt from inheritance tax. This mean for investors holding these shares in their ISA account for the two-year qualifying period should benefit from virtually no taxes while they hold the share, and no potential inheritance tax liability, which is currently charged at 40%.

Please remember the value of tax shelters will depend on individual circumstances, and tax rules can change over time.

Following the introduction of new ISA rules many investors are now looking to transfer their AIM shares into an ISA account, typically using a Bed & ISA service. The good news is that this doesn’t affect the qualifying period so, for example, if you transfer AIM shares you have already held for two years this inheritance tax benefit will be retained within the ISA, without them needing to be held for a further two years.

So which AIM stocks qualify?

There is no definitive list of which AIM stocks qualify for business property relief. This is largely because the qualification status of a company or businesses can change over time. The latest HMRC guidance is available at

Please bear in mind AIM stocks typically involve taking greater investment risk, make sure you understand all the consequences. We always recommend you seek professional advice. Your portfolio could fall in value and be worth less than your originally invested.

HMRC Allowable Gifts for Inheritance Tax

HMRC Allowable Gifts for Inheritance Tax

There’s usually no Inheritance Tax to pay on small gifts you make out of your normal income, such as Christmas or birthday presents. These are known as ‘exempted gifts’.  There’s also no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime – as long as they live in the UK permanently. Other gifts count towards the value of your estate. There may be Inheritance Tax to pay if you’ve given away more than £325,000, but only if you die within 7 years.

What counts as a gift

A gift can be:

  • Anything that has a value, such as money, property, possessions
  • A loss in value when something’s transferred, for example if you sell your house to your child for less than it is worth, the difference in value counts as a gift.

Exempted gifts

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’. You can carry any unused annual exemption forward to the next year – but only for one year.

Each tax year, you can also give away:

  • wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great grandchild, £5,000 for a child)
  • normal gifts out of your income, for example Christmas or birthday presents – you must still be able to maintain your standard of living after making the gift
  • payments to help with another person’s living costs, such as an elderly relative or a child under 18
  • gifts to charities and political parties

Small gifts up to £250

You can give as many gifts of up to £250 per person as you want during the tax year as long as you haven’t used another exemption on the same person.

The 7 year rule

If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.

Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.


Remember – Gifts are not counted towards the value of your estate after 7 years.

Please note this article is for information purposes only.

What is Equity Release and how does it work

What is Equity Release and how does it work

Equity Release what is it?

Equity release refers to a range of products that let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both. The “catch” is that the income-provider must be repaid at a later stage, usually when you die. Thus equity release is particularly useful for elderly persons who do not intend or are not able to leave a large estate for their heirs when they die.

There are typically two equity release options:

Lifetime Mortgage

You take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.

  • If you’ve taken out an interest roll-up plan, there will be less for you to pass onto your family as an inheritance.
  • Debt can grow quickly if the interest is rolled up.
  • You will have to pay arrangement fees, which can reach approx. £1,500-£3,000 in total.
  • If you decide you want to downsize later on you may not have enough equity in your home to do this.
  • The money you receive from equity release may affect your entitlement to state benefits

Home Reversion Plans

You sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values.

  • You will have to pay arrangement fees, which can reach approx. £1,500-£3,000 in total.
  • If you release equity from your home, you may not be able to rely on your property for money you need later in your retirement. For instance, if you need to pay for long-term care.
  • If you decide you want to downsize later on you may not have enough equity in your home to do this.
  • The money you receive from equity release may affect your entitlement to state benefits
  • These schemes can be complicated and expensive to unravel if you change your mind.
  • Home reversion plans will usually not give you anything near to the true market value of your home when compared to selling your property on the open market

Always seek independent financial advice and legal advice before committing to an equity release scheme. There are many risks in both lifetime mortgages and home reversion plans. This article is for information purposes only and should not be considered as advice.

Our Financial Education Employee Workshops

Our Financial Education Employee Workshops

Our Workshops

We pride ourselves on creating original, engaging and independent presentations that can deliver understanding on a range of topics.

A popular programme has been our ‘Five Pillars of Financial Planning’ that covers a wide range of topics. We tailor this to reflect the unique workforce of any given business, along with specific benefits packages including sick pay arrangements and pension schemes.

We are experienced at delivering these presentations to a diverse audience, across different age ranges and life cycles.

Our service includes:

  • Qualified presenters who are Independent Financial Advisers with a minimum of 10 years’ experience
  • Location anywhere across the UK
  • 5 hours of presentation time per day
  • Printed and bound notebooks
  • Bespoke online access to a private web portal where presentations can be downloaded (minimum 12 month support)
  • Dedicated contact form online to submit questions
  • Online library of FAQ’s

The Structure

The typical structure would be to provide 2 presentations a day, each lasting for 2:30 hours (with Q&A’s this typically runs over by 10mins per session). The morning sessions would typically start at 10:00 running until 12:30, with the afternoon sessions starting at 13:30 running until 16:00.

The Benefits

More than 8 in 10 employees feel anxious over their personal finances, with 1.4 million Britons taking time off work in the past 12 months as they struggle to cope. The study from AXA PPP healthcare reveals 24.6 million employees feel some degree of anxiety over their financial position, and more than 10 million admit their financial worries are affecting their performance.

7 in 10 admit they spend time at work worrying about their finances, with almost a third (31%) spending up to 15 minutes thinking about the problem. More than 10 million (35%) believe financial concerns are preventing them from performing at their best.

The survey also reveals 1.2 million employees (4%) spend more than four hours a day feeling anxious and the most pressing concern for most is repaying debt or bills. A fifth of 18-24 year-olds drink alcohol to take their mind off their financial concerns.

If you would like to know more, please get in touch with a member of the Heritage Team.

What Brexit means for the UK and the EU

What Brexit means for the UK and the EU

The UK’s surprise decision at the Polls – Brexit

The end of polling in the UK’s referendum on continued participation in the European Union (EU) at 10pm London time on Thursday proved to be the high point in the expectations that a ‘remain’ vote would prevail.  At that moment a well-known betting organisation placed a 90%+ probability on the continuation of the political and economic bloc’s status quo.  A little over six hours later such hopes were completely dashed.

The 52%/48% victory for the ‘leave’ campaign reflects a widespread distrust of Europe-wide policy-making and regulatory intervention in the UK as well as a scepticism about immigration and a nationalism which prefers more complete rule from the UK’s Parliament.  The rejection of the preferred choice of the favoured choice of most of the UK’s political leadership and almost all countries of note has implications far beyond the UK.

Given the unanticipated nature of this decision it is not too surprising that the British Pound fell sharply – briefly to a 30+ year low against the US dollar – and the UK equity market followed suit.  Financial market volatility was augmented by the resignation of the UK Prime Minister who will stay in office just to oversee the election of his successor.  Fears that rating agencies will downgrade their AAA ratings on UK debt and that the Bank of England would have to enact some support mechanisms to help the Pound completed the scene.

The UK has a two year period of grace to negotiate its exit from the European Union and much uncertainty surrounds the practicalities around this move.  Leading European Union politicians have generally been quite coy on next steps so far although more clarity is expected over the weekend.  The UK will leave the European Union though and will have to strike new, bilateral trade deals.  There is inevitability uncertainty around this and the scope to have a direct impact on economic growth rates over the next few years is clear – after all most formal economic studies on the impact of a “Brexit” identified clear economic growth declines.

The decision will also impact European politics and potentially even the structure of the euro single currency zone.  Nationalist politicians across the European Continent are starting to demand their own referendums and the upcoming Spanish election this weekend could reflect a continuation of the electoral disquiet via a large vote for the anti-austerity party on the bill.  These are difficult times for Europe and policy-makers need to re-engage on a broader European vision for the future blending economic flexibility reforms and greater cross-border support.   We can not rule out more economic policy stimulus.

The same is true for the UK.  The country cannot just rely on a sharp fall in the value of the Pound to come to their aid.  If the UK wishes to take full advantage of exiting the European Union then it too must boost flexibility further – but how to do this without such a direct flow of immigrant labour (if tighter restrictions are imposed on entry which is likely) and also countering the feeling of anti-austerity disquiet at a time that fiscal and trade deficits are already high is not clear.  Now comes the harder part of policy implementation.

As today’s financial market moves show it is hard not to conclude that Europe (including the UK) has scored an old goal today with unclear repercussions over time.  The best companies will still prove able investments but for most international investors the general European markets have become that little bit harder to invest in.

This article is for information purposes only and should not be taken as advice.

The Budget 2016 – The Highlights and Summary

The Budget 2016 – The Highlights and Summary

George Osborne has revised down the UK’s growth forecast in his 8th Budget and warns about a “dangerous cocktail” of global economic risks. However, he believes the UK is “well placed” to handle it. Mr Osborne will seek to save £3.5bn by 2020 through extra spending cuts.

  • He froze fuel duty but announced a 2% increase in tax on cigarettes, with 3% on rolling tobacco.
  • He said the £530m raised by a tax on the makers of sugary drinks would be spent on boosting school sports.

Mr Osborne said the Office for Budget Responsibility had made clear its forecasts were based on the assumption the UK would remain in the UK and had warned that “there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty”.

Growth forecast to be 2% in 2016, down from 2.4% in November’s Autumn Statement and GDP predicted to grow 2.2% and 2.1% in 2017 and 2018, down from 2.4% and 2.5% forecast four months ago.

Key Announcements 

  • Mr Osborne confirmed that he has failed to meet a fall in debt as a proportion of GDP this year.
  • The UK is still on course to clear its deficit by 2019/20.
  • Corporation tax to be cut to 17% by April 2020 – great news for small business.
  • An extra £700m for flood defences – to be paid with a 0.5% increase on the tax on insurance premiums.
  • Reforms to business rates which will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017.
  • New action to tackle overseas retailers who who store goods in Britain and sell them online without paying VAT.
  • New tax free allowances for “micro entrepreneurs” who rent their homes or sell services through the internet.
  • Chancellor George Osborne has unveiled a tax on the makers of sugary soft drinks to tackle childhood obesity.

Savings, Allowances and Tax

  • A new lifetime ISA to be introduced allowing anyone under 40 to save £4,000 per annum till age 50 and receive tax relief at 25%.
  • ISA limit to increase from £15,240 to £20,000 in April 2017.
  • Personal allowance to increase to £11,500 by April 2017.
  • Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers.
  • The threshold at which people pay 40% tax will rise from £42,385 to £45,000 in April 2017.
  • The Money Advice Service, which has provided financial advice to consumers since 2010, is to be abolished.


  • Headline rate of corporation tax – currently 20% – to fall to 17% by 2020.
  • Anti-tax avoidance and evasion measures to raise £12bn by 2020.
  • Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms.
  • Supplementary charge for oil and gas producers to be halved from 20% to 10%.
  • Petroleum revenue tax to be “effectively abolished”.
  • £9bn to be raised by closing corporate tax loopholes and tax minimisation schemes.
  • Use of “personal service companies” by public sector employees to reduce tax liabilities to end.
  • Commercial stamp duty 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m. Effective from midnight.
End of Tax Year Checklist

End of Tax Year Checklist

Make the most of the tax year end with these helpful tax allowance tips. Please note tax rules are subject to change over time and the benefits of these tax wrappers depend on individual circumstances.

  • Open an ISA (Individual Savings Account) – You can shelter upto £15,240 from income and capital gains tax this year. Remember if you dont lose your ISA allowance for the tax year, you lose it!
  • Open a Junior ISA – The junior ISA allowance is currently £4,080 and offer similar tax benefits to adult ISAs. All children are now eligible for these new tax wrappers.
  • Use your Personal Allowance – Reports are suggested that the Chancellor is considering cutting tax relief in an effort to reduce costs, this could mean higher rate and additional rate tax payers lose out.
  • Use your Capital Gains Tax Allowance (CGT) – This tax year you can realise £11,100 without paying tax, if you hold shares or funds outside of a tax wrapper it could be a good time to sell some.
  • Reduce your Inheritance Tax (IHT) – Make gifts of upto £3,000 from capital each tax year, which will be exempt from inheritance tax. You can also carry forward any unused allowance from last tax year.
  • Seek advice – if you need help in making the most of your tax shelters and allowances, speak to an Independent Financial Adviser who can assist you.
The Budget July 2015 Highlights

The Budget July 2015 Highlights

Highlights of George Osbourne’s 7th Budget. A Budget for working people

George Osbourne “A Budget that sets out a plan for Britain for the next five years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create”.

Economy growing faster than any other advanced economy, UK has created 2 million more jobs in the last 5 years. British economy is fundamentally stronger than 5 years ago.

Economic Highlights

  • Business investment was 31.9% higher than 2010 and revised up again this year.
  • The deficit – that’s the gap between borrowing and income – was 10.2% of national income in 2010. This year it’s expected to be 3.7% and 2.2% in 2016/17, budget surplus in 2019/20.
  • Borrowing forecasts – £69.5bn for the fiscal year we are in, £43.1bn next fiscal year and £23.3bn in 2017/18. Then it will be £6.4bn in the year to April 2019.

Budget Highlights

  • The NHS will receive £8bn on top of the extra £2bn provided this year, or £10bn a year more by 2020.
  • Bank levy rate to be gradually reduced over the next six years. However, a new 8% surcharge on bank profits will be introduced from 1st January 2016.
  • Public sector pay awards of 1% a year for next four years.

Non-domicile tax rules, in place since 1914. George Osbourne says they have an “important place” and won’t be dumped outright, but “it is not fair for people to be born in the UK” to non-dom parents and then claim to be non-doms themselves. Putting homes in offshore companies is not fair either, nor is permanent use of the status, he says. From 2017, non-doms who’ve spent 15 of the last 20 years in the UK will pay the same tax as everyone else, he says. The new rules will raise £1.5bn.

  • Claims management companies will be more strictly regulated and insurance premium tax will be raised to 9.5% from November.
  • New Vehicle Excess Duty (VED) will be introduced for all brand new cars and there will be bands depending on how polluting they are, the funds generated will be used to create a new roads fund.
  • Fuel Duty will remain frozen this year.
  • Student maintenance grants replaced with loans from 2016/17.
  • Further powers devolved to the Greater Manchester Area, including the fire service.
  • New apprenticeship levy introduced on large firms.
  • As expected, there’ll be the option to relax Sunday trading hours. Local councils and their Mayors will have the power to set the hours in their areas.
  • From 2017, there will be a new £175,000 allowance on homes left to children or grandchildren, allowing £1 million to be passed on tax-free.

Mortgage interest payments can be offset against income for buy-to-let landlords, an unfair advantage over people buying homes to live in, George Osbourne says. This has fuelled buy-to-let mortgages, which are now 15% of the market. Mortgage interest relief will be restricted to the basic rate of interest, he says. Room rental tax relief will be raised to £7,500.mortgages, which are now 15% of the market. Mortgage interest relief will be restricted to the basic rate of interest, he says. Room rental tax relief will be raised to £7,500.

  • Mr Osborne says the dividend tax system is “complex and archaic”. He’s replacing dividend tax credit with a tax-free allowance of £5,000 of dividend income for all taxpayers. The rates of dividend tax will be set at 7.5%, 32.5% and 38.1%
  • Corporation tax will be cut to 19% in 2017 and 18% by 2020.
  • The BBC will to take on responsibility for funding free TV licences for the over 75s. In return the government will “give our valued public broadcaster a sustainable income for the long term”
  • The chancellor says those aged 18 to 21 must either earn or learn, so he is abolishing automatic entitlement to housing benefit for that age group. This, he says, this will be new “youth obligation”.
  • From September 2017, all working parents of three and four-year-olds will receive free childcare of up to 30 hours a week.

Rents paid in the social housing sector will be reduced by 1% a year for the next four years, and the income threshold in tax credits will be reduced, from £6,420 to £3,850.

Universal Credit work allowances will be similarly reduced – and will no longer be awarded to non-disabled claimants without children. The rate at which a household’s tax credit award is reduced as they earn more will be increased.

  • The £26,000 cap on benefits will be reduced to £23,000 in London and £20,000 outside the capital.
  • Rates of income tax remain unchanged but the thresholds do not. The personal allowance goes up to £11,000 from next year. The threshold at which the higher rate kicks in will go up to £43,000. 29m people will pay less tax.
  • Mr Osborne says he will meet the Nato pledge to spend 2% of national income on defence – every year of this decade.
  • New compulsory living wage of £9 hour by 2020. It’ll be £9 per hour by 2020 for people 25 and older. And it’ll start at £7.20 an hour from next April.
  • Child Tax Credit will be limited to two children from April 2017

That brings to an end the Budget speech – the first all Conservative Budget since 1996.

New ISA Inheritance Rules

New ISA Inheritance Rules

The new ISA regulations have been amended in order to provide an additional ISA allowance for the spouse or civil partner of an ISA saver who dies on or after 3rd December 2014. This will be equal to the value of the deceased person’s ISA savings at the time of their death, and will be in addition to the normal ISA subscription limit.

This measure will enable the spouse or civil partner of a deceased ISA saver to benefit from an additional ISA allowance, and therefore to have more of their savings tax advantaged.


William died on 5th December 2014, leaving £50,000 of ISA savings and investments to his wife Anne. On 6th April 2015 she is given a one-off tax-free allowance of £50,000 to invest into a new or existing ISA, on top of her existing ISA allowance of £15,240. This gives her a combined tax-free ISA allowance of £65,240.

To conclude, any money you inherit this way will be in addition to any ISA allowance you have. This does not apply to common-law partners.

Important Considerations:

-These new rules should prompt individuals to redraft or make a will in order to ensure their ISAs are left to each other, or they are at risk of missing out on this new tax break.

-The value of ISAs are subject to inheritance tax on death with one main exception – where ISA investments qualify for business property relief such as qualifying AIM shares held for a two year period. Please note transfers of ISAs between spouses on death are free from IHT.

Contacting an Independent Financial Adviser can help you understand what these new rules mean to you and how they can benefit you.

This article is intended for information purposes only and should not be taken as advice.

Mold Local Business Forum’s Showcase Event

Mold Local Business Forum’s Showcase Event

Heritage Financial Solutions Ltd is attending Mold’s ‘Business Showcase Event’ on the 4th June 2015.

It’s a great opportunity to promote your business to other key local businesses.

It includes:

-Business 2 Business networking

-Q&A session on doing business in Mold

-Meet other members of Mold Business Forum & find out the benefits
of becoming a member.

-Completely free attendance for registered delegates

-Light refreshments provided

Join us Thursday, 4th June 2015 5.00pm -7.30pm at Delyn Safety UK, Conference Facility, St David’s House, 6 Queens Lane, Mold, CH7 1JR in order to take advantage of this networking event.

Contact Mold Business Forum on 01352 703219 or at in order to secure a place.