Using your ISA for IHT planning
Charles mitigates his inheritance tax liability using the Stellar AiM ISA Inheritance Tax Service.
The Client
Charles is in his seventies and has spent nearly 20 years accumulating a significant ISA portfolio with a current value of around £150,000. While this has been a very tax efficient vehicle for both capital gains tax and income tax relief during his lifetime, Charles would like to shelter his investment from inheritance tax (IHT).
Charles doesn’t want to give away his assets to do this, nor does he want to go to the expense of putting it into a trust or buying a life assurance policy. It is important to Charles that he retains control over his capital.
Our Solution
Charles has never invested on AiM (the Alternative Investment Market), but has been impressed by Stellar’s focus on capital preservation and the performance record of their Stellar AiM ISA Inheritance Tax Service. As added protection, he also has the option of taking out insurance to protect his investment from any loss of value to give him peace of mind.
Charles can make a direct transfer into the Stellar AiM ISA Inheritance Tax Service, which should qualify for 100% IHT relief after two years. This solution gives him access to, and control of, his capital whilst retaining all his ISA benefits.
Key Features
As the table below shows, even if the value of Charles’ ISA within the Stellar AiM ISA Inheritance Tax Service does not increase, his beneficiaries should still be able to save nearly £60,000 after all fees are paid, by not having to pay the 40% inheritance tax liability.
Result after 3 years
Important Information
Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Capital is at risk. Investments in unquoted companies are less liquid and are higher risk. The rates of tax, tax benefits and tax allowances described are based on current legislation and HMRC practice. They are not guaranteed, are subject to change and depend on personal circumstances. This document is dated 10th September 2020 and is exempt from section 21 of the Financial Services and Markets Act 2000 and is not required to be and has not been approved for the purposes of the section because it is only being communicated to selected Investment Professionals (as defined under article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005). If this document is forwarded to any other person, you must ensure that you have taken responsibility for the document under the financial promotions rules and identified yourself as the issuer. Stellar Asset Management Limited of Kendal House, 1 Conduit Street, London W1S 2XA is authorised and regulated by the Financial Conduct Authority.