Inheritance Tax

[lloyds99]

Hello
I’m 73 and my wife 74, I’ve recently been diagnosed with Parkinson’s disease so my time on earth is quite unknown. We have a joint-life insurance of £177k.
We have savings of £800k, our PPR is worth £650k, and other properties of £400k. We made PET gifts of £300k to each of our two children in 2013/5.
My IFA is recommending putting £100k into qualifying AIM shares and hoping we live for 2 years to gain their IHT benefit. I’m a little unsure about this advice because I read that 92% of AIM shares lost money last year but could be easily convinced to make this investment if other people (you) recommend it.
Our pension and rent income of £41k is more than enough for us to live on.
We are prepared to gift more money to our children to shrink the IHT bill but we’re not sure we will live for 7 years for the gifts to become exempt.
I would be grateful if anyone can offer suggestions we may not have thought of to give this IHT a miss.
Thanks, Lloyd

[AGoodman]

For those sums, you really should be getting professional advice - see https://www.step.org/member-directory.

Essentially, if you want to reduce the IHT bill on your joint estates you have three options:

1. Gifts (and if your wife is in better health, it might make sense for her to make these);
2. Reliefs - essentially business property relief (e.g. AIM) or agricultural property relief (farming); and/or
3. Exemptions - spouse exemption (which you know about) and charities.

The only other way is to hope IHT is abolished or the threshold is dramatically increased. Neither are likely any time soon.

I doubt anybody on this forum will give investment advice (including me) but the two issues to look out for with AIM are performance (bearing in mind the possible aim of saving 40% tax) and liquidity - shares are no good if you cannot sell them again.

[maths]

I would be very careful of undertaking investments (eg AIM) motivated by IHT savings.

Given the extent of your joint wealth I would suggest taking professional advice specifically on your facts from someone conversant in tax planning not an IFA.

[lloyds99]

My thanks to "AGoodman" and "maths" for their kind and considered replies. I know trying to minimise IHT at this late date is my own fault but my diagnosis of Parkinson's has made me realise that although I've been grafting and saving all my life I haven't really given tax planning a thought and now I'm doing it in a panic. Oh well, I 'll know better next time!!
Regards, Lloyd

[maths]

Now that’s positive thinking!!