Inheritance Tax in the Spotlight with Oakglen

Oakglen Wealth Responds to Calls for Inheritance Tax Reform Amidst Election Pressure

  • Scrapping of AIM-listed business relief could result in far-reaching implications

As the political discourse intensifies in the run-up to the forthcoming elections, one topic that repeatedly takes centre stage is inheritance tax (IHT). Frequently perceived as an added financial burden, unfairly impacting the middle class, IHT affects roughly 5% of the population.

Dominic Tayler, Managing Director – UK at Oakglen Wealth, sheds light on strategic options available to those seeking to navigate this complex tax landscape, offering two primary pathways to consider.

Dominic Tayler comments: “IHT remains a contentious and often unpopular tax, with a perception of being a further levy on hardworking individuals and middle-class families. Despite the widespread discourse, the actual tax impact is limited to a relatively small segment of the population.”

Tayler presents two paths for individuals and families which reduce their IHT obligations. The first involves situations where assets are gifted, provided the donor survives for at least seven years. The second, a more expedited approach, focuses on investing in qualifying assets that become IHT exempt after just two years. This investment approach pertains to assets within the realm of UK unlisted investments and the Alternative Investment Market (AIM), subject to specific restrictions.

Commenting on investment managers offering these services, Tayler offers a word of caution: “Selecting the right investment manager is crucial in this space. Most tend to focus on larger companies, potentially putting investors at risk, as we’ve seen in cases like Fevertree, Asos, Boohoo, and the cautionary tale of Patisserie Valerie.”

“The skillset and patience required for investing in this arena are distinct from traditional portfolio management. Emphasising long-term value and risk reduction is critical, especially in one of the most challenging markets for small-cap investors in over three decades.”

Tayler also warns about the potential consequences of significant changes in the market: “The majority of players in this field invest heavily in the larger qualifying companies. Any alteration, such as the scrapping of AIM-listed business relief, could have far-reaching implications.”

“Despite the political rhetoric surrounding IHT, its abolition remains uncertain. Therefore, the opportunity for investments that qualify for relief should not be dismissed. However, it’s imperative not to follow the crowd. The AIM market has its share of pitfalls, and to navigate them, it’s wise to consult a specialist, particularly in the realm of small-cap investments. This territory is not for the faint-hearted, and any funds invested here may be subject to more significant risks than the relief promises. Seek advice from a financial adviser with expertise in this area.”

This is based on Dominic Tayler’s outlook on inheritance tax in the lead up to the forthcoming general elections.

Click here to connect with Dominic on LinkedIn Contact Dominic >

Dominic Tayler
Managing Director - UK