Investor Taxation

Inheritance tax

Business Property Relief of 100% may be available in respect of the transfer of shares quoted on AIM, subject to certain conditions. These conditions include:

• the business must be a qualifying business,
• and the shares must have been owned for a minimum period.

Broadly, to be a qualifying business, the business must be engaged in trading, rather than investment, activities.

Normally, the donor must have owned the shares that have been transferred throughout the two years immediately before the transfer.

Note that shares with a dual listing on a recognised stock exchange would not qualify for this relief.

The above is not exhaustive and the availability of the relief depends on the specific facts of each case, and so specialist advice should be sought in each case.

Capital Gains Tax

In the UK Pre-Budget Report of October 2007, proposed changes to the capital gains tax rules were announced. These changes have now been set out in the Finance Bill 2008. Under these amended rules capital gains tax will be charged at a flat rate of 18% for individuals, trustees and personal representatives, irrespective of how long an asset has been held and taper relief and indexation allowance will be withdrawn.

Legislation to implement this proposal is included in Finance Bill 2008, and as drafted will affect the treatment of disposals of shareholdings on or after 6 April 2008 (although the terms of Finance Bill 2008 may be amended). These changes to capital gains tax as currently drafted do not affect holders which are within the charge to United Kingdom corporation tax in respect of their chargeable gains.