At the time of writing, tax breaks for UK investors willing to buy risky assets have come under scrutiny ahead of the Budget after finance experts called for the government to reconsider what policy objectives they achieve.
“Reliefs shouldn’t just sit there forever. They should be looked at both in terms of amounts and in terms of whether we actually need them at all,” said Bill Dodwell, tax director at the Office of Tax Simplification, a statutory body, giving evidence this week to MPs on the Commons Treasury select committee.” says the FT
Dodwell went on to say…”But their IHT advantages for investors have come into question as business relief was designed in the 1970s to ensure small family-run businesses could continue to trade after the death of the owner. “If you are buying shares on the Aim market, you don’t need the inheritance tax relief in the sense that if you sold the shares it’s not going to affect the business at all,”
Whilst there will be advisers and product providers frightened about their business flows if these changes come about, it means investors do need to rethink their strategies for tax-driven investing.
Simply, your focus should always be on the investment quality, then worry about tax…not vice versa.
There is a view that if AIM tax relief was capped or abolished, it may precipitate a collapse in AIM shares. It seems logical that at some point AIM shares will be targeted. It’s a question of whether you remain invested by assessing the tax risk.
It’s time for a conversation.