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Growth potential, ISA benefits and inheritance tax exemption in one investment

Some people are not aware that ISAs are subject to inheritance tax like most other investments. The Octopus AIM Inheritance Tax ISA was one of the first ISAs to offer inheritance tax exemption as well as ISA tax benefits.

With the Octopus AIM Inheritance Tax ISA, we invest your clients’ money in a portfolio of carefully chosen companies listed on the Alternative Investment Market (AIM). We choose established companies that are typically profitable and pay regular dividends. Your client retains access to their investment, which continues to enjoy all the benefits of the ISA wrapper. However, the most important factor is that we invest in the shares of companies that are expected to qualify for Business Property Relief. This means that as long as shares have been held for at least two years and are still held when the investor dies, they can be left to their beneficiaries free from inheritance tax.

You should keep in mind that tax rules may change in the future, and the value of tax reliefs depends on individual circumstances. You should also know that tax reliefs depend on portfolio companies maintaining their qualifying status.

Please remember, we cannot offer any guarantees about the growth your clients will achieve, and they may not get back the full amount they invest.

Make sure you look at the ‘What are the risks?’ section below and please read the product brochure for full details of fees, charges and risks.

Reasons to consider the Octopus AIM Inheritance Tax ISA

Potential for growth and dividends
The Octopus AIM Inheritance Tax ISA invests in a portfolio of carefully-chosen companies listed on AIM, the world’s most successful market for fast-growing smaller companies.

A simple process
This is an investment in shares that we select. There are no complicated legal structures (as with a trust) and no medical underwriting (as with an insurance policy). The client retains access to the investment, which continues to enjoy all the benefits of the ISA wrapper.

More of your client’s wealth can be passed on to their family
The Octopus AIM Inheritance Tax ISA invests in companies that are expected to qualify for relief from inheritance tax. It can be an effective way to reduce or potentially even eliminate an inheritance tax bill that a family may otherwise have to pay on the deceased’s estate.

Speed
Traditional estate planning solutions can take seven years before they become exempt from inheritance tax. However, an investment in this service can become 100% inheritance tax exempt after just two years.

Access
Investors can ask us to sell shares at any time. We can usually sell shares within a week, however, in some instances it could take significantly longer.

A highly experienced Smaller Companies team
The Smaller Companies team creates portfolios for investors that feature established AIM-listed companies. The founding members of the team have been working together for over ten years, and today the team manages approximately £1 billion on behalf of over 15,000 individuals, invested across several different types of AIM-focused products.

What are the risks?

Investors may lose money
The growth in value of this investment depends on the performance of the companies in the portfolio. We do not offer any guarantees about the growth investors will achieve, and it’s important to understand that the value of investments can go down as well as up, and investors may not get back the full amount invested.

On a day-to-day basis, the value of AIM-listed companies can fall or rise more sharply than shares in larger companies listed on the main market of the London Stock Exchange.

Tax rules can change
Rates of tax, tax benefits and tax allowances are based on current legislation, interpretation based on case law, and HMRC practice. We can’t guarantee that tax rules or the tax benefits for ISAs won’t change in the future. The value of tax reliefs depend on an investor’s personal circumstances.

The investment may be difficult to sell
The shares we invest in are not listed on a stock exchange and may take longer to sell than the shares of companies listed on the main market of the London Stock Exchange. The timing of share sales, and when we can return the proceeds to your client, cannot be guaranteed.

BPR is assessed on a case-by-case basis
We cannot guarantee that the investments we make will qualify for BPR in every case in the future. HMRC will only conduct a BPR assessment after the death of an investor, to confirm whether the companies invested in qualify for BPR at that time. If an investor borrows money to invest in the Octopus AIM Inheritance Tax ISA, the investment is unlikely to qualify for relief from inheritance tax.

Related Documents

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Octopus AIM Inheritance Tax ISA brochure

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Octopus AIM Inheritance Tax ISA application form

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Octopus Inheritance Tax products terms and conditions

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Octopus AIM Inheritance Tax ISA top-up form

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How to invest

Your ISA subscription and/or transfer(s) must add up to at least the minimum investment of £20,000. If you are topping up your existing Octopus AIM Inheritance Tax ISA, the minimum amount you can top up is £20,000. The amount of your ISA subscription cannot exceed the maximum ISA allowance for the tax year.

 
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Nothing on this page constitutes investment, tax or legal advice. This product is not suitable for everyone, so we recommend investors speak to a financial adviser before deciding whether to invest.