I have a query that affects me, and – I suspect – a good number of other readers. You occasionally refer to the inheritance tax (IHT) benefits of holding Alternative Investment Market (Aim) shares – ie certain Aim shares benefit from business property relief (BPR) if held for a minimum of two years.
There are a number of funds that will manage an Aim portfolio, and screen shares, as far as possible, to exclude companies that do not qualify for BPR. Octopus is one. I prefer to buy shares directly to avoid management fees, and I currently hold a mixture of Aim and main-market shares in an individual savings account (Isa), managed by iDealing.com. I have read in the IC that the two-year rule requires a continuous holding of Aim shares for the period, but that one does not have to hold the same share throughout. In the case of a fund, the manager must buy and sell shares as companies go bust, migrate to the main market, or simply underperform.
Please could you clarify the rules here? Can I buy and sell Aim shares to the same value within a two-year period, with the investment still qualifying for BPR? How quickly must any proceeds be reinvested? What if I add further shares to an Aim portfolio over time? If any of this is possible, would it be wise to open a separate Isa account for Aim shares only?
A supplementary question: I was led to believe that one of the requirements for Aim shares to qualify for BPR is that they must be directly held, ie not held in a fund. If so, how do funds like Octopus get round this obstacle? Your advice would be much appreciated.
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