IHT, AIM shares, and Gifts
Posted: June 1st, 2022, 9:08 am
I have a fried who wishes to reduce his IHT exposure. He might live 7 years, but isn't sure, and is concocting what seems a complex arrangment with his grandchildren to set up small businesses with them (as a sideline to their main jobs, current thought is buying derelict properties to do up) to get business relief.
This seems plausible, but AIUI the beneficiaries must continue to operate the business until he dies, which could be 15 years!
My idea was to gift money to take him to his IHT limit (say he gets the full £1m allowance but has £1.4M, then to gift £400k) and then to move an equivalent amount in IHT exempt investments, eg. the Octopus funds.
Is my initial assumption correct, and am I correct in thinking that if he died in 5 years, then the £400k gifts would come back into the Estate, however the Octopus fund would reduce his taxable estate back to his NRB?
Paul
This seems plausible, but AIUI the beneficiaries must continue to operate the business until he dies, which could be 15 years!
My idea was to gift money to take him to his IHT limit (say he gets the full £1m allowance but has £1.4M, then to gift £400k) and then to move an equivalent amount in IHT exempt investments, eg. the Octopus funds.
Is my initial assumption correct, and am I correct in thinking that if he died in 5 years, then the £400k gifts would come back into the Estate, however the Octopus fund would reduce his taxable estate back to his NRB?
Paul