Polly, Love, no, really

Why is capital gains tax on property and shares forgotten after someone dies? Tax relief for Alternative Investment Market shares, intended for startups, mainly benefits the super-rich.

Because we already charge inheritance tax at 40% on the estate. And the idea that start ups getting funded mainly benefits the super-rich is more than asinine even by your standards Dearie.

17 comments on “Polly, Love, no, really

  1. I think that Polly’s idea here might be that it would be a good idea to charge CGT to bring the value of an estate below the IHT threshold.

    Attagirl!

  2. I love these champagne socialists. Just like Churchiegirl screeching for MOAR tax, they crap themselves at the thought of it actually happening.

  3. @ BraveFart and Just a bloke
    AIM shares that have been held *for a long enough period* (I think it’s three years) are exempt from IHT.

  4. How much does the AIM enable cash to hit the pockets of people who were not, until that point, rich? And how much does it provide an exit strategy for Private Equity which is, very much, a pastime of the already loaded?

    How much is it used because of the tax implications? Are they necessary or would things all work fine without them? We like simplicity in tax, yes?

    It can be a good thing without it necessarily being a good target of tax perks. The only AIM shares I ever owned were in a football club founded in the 1860’s. It was a terrible investment, obviously, and I certainly wasn’t funding innovation, directly or indirectly. I wasn’t super rich.. but what the fuck did I need a tax deduction for?

  5. “john 77

    @ BraveFart and Just a bloke
    AIM shares that have been held *for a long enough period* (I think it’s three years) are exempt from IHT”

    Who needs tax advisors?

    Almost all tax questions can be answered and all tax planning done after reading the Sunday supplements and having a chat with “my mate down the pub”.

    So much cheaper than getting professional advice.

  6. Anyone suffering from acute appendicitis?

    No need to go to a surgeon. My mate down the pub told me that he’d read in a Sunday supplement that;

    “The appendix sits at the junction of the small intestine and large intestine. It’s a thin tube about four inches long. Normally, the appendix sits in the lower right abdomen.”

    Can’t be that difficult to cut the bugger out now that I know where it is.

  7. @ Andrew C
    I don’t pretend to be a Tax Advisor – but BraveFart’s comment implied all AIM shares were IHT-exempt.

  8. Sorry, my comment was not meant to be comprehensive tax advice if any pendantic fvckwit took it to be, but a general statement of the position.

    When I do my tax research I use Lexis Nexis tax library, including principally Simon’s, De Voil and Tolleys, although I don’t advise on IHT.

  9. “I think at least some AIM holdings can be passed on without inheritance tax.”

    I can see – without really very much thinking on the topic – a very very sound rationale for this.

    A very non-trivial proportion of AIM listed companies have, along with the usual gaggle of ordinary shareholders, a small number of shareholders with large holdings, usually founders or directors of the company, for whom this can be a very non-trivial part of their entire estate. This is why they’re on AIM, not the main market.

    A very non-trivial proportion – I’m tempted to write “All” – of the markets for these shares are illliquid. Very low trading volume indeed.

    If one of the founders dies, the grieving family, having just lost their breadwinner, will then be forced to sell 40% of their holding to pay the IHT which, of course, must be paid in cash. This cannot be done due to the low volume and even if it could, would crash the price so hard that it would raise nowhere near the 40% of the price the day before.

    HMRC forcing grieving family to sell their house to the pay the IHT bill doesn’t have the right optics.

  10. Also, this isn’t true:

    “Why is capital gains tax on property and shares forgotten after someone dies?”

    The gain between the point that the deceased bought them and their death is ignored as the entire value at that point is charged at 40% to IHT.

    However, it can take some time for probate to be granted. Capital gain between the date of death and the grant of probate IS liable to CGT. CGT will have to be paid on this subsequent gain if the shares are sold and the estate is paid out in cash. It is however possible for beneficiaries to take legacies in shares with the transfer value being that at the date of death.

    In this case, the beneficiary takes on the CGT liability – it just need not crystallise at that point.

    But note that IAMAL 🙂
    Or a tax specialist – I just happen to have been asked to make this decision (cash after CGT or shares booked at date of death) just recently.

  11. What The Pedant-General said. AlthouvhI would add to his previous comment the effect on the start-up business of a forced sale to meet an IHT bill.

  12. Aim as an exchange contains a whole bunch of businesses. By no means all are start-ups. Some are rather substantial,such as Fevertree with a market cap of £3bn,approx. Not all were start ups, eg Boku. The question of which ones are eligible for IHT relief is rather complex and seems to be determined in an ad hoc kind of way by our friends in HMRC. Andrew C might have the list (which remarkably few brokers seem to own)

  13. After a bit of digging into companies that benefited from Business Property Relief :

    “of the 1,087 companies listed on Aim at the end of January 2014, just two-thirds qualified. In many cases the reasons for non-qualification were clear – those with dual trading on a recognised overseas exchange, and companies whose principal activities are excluded from the relief, notably investment companies. However, in the case of a significant number of shares it proved harder to categorically determine whether they qualified or not – resources companies, for example, would qualify on the basis of their principal business activity, but are often structured as investment companies” which do not…..”The BPR status of a share is not set in stone. If the nature of a company’s principal activities changes, or it finds itself on the end of a takeover offer, then the shares’ qualifying status might lapse.”

    And yes you need to own the shares for 2 years

Leave a Reply

Name and email are required. Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.