Aim shares: make your Isa less taxing

Once considered too risky for an Isa, Aim shares can offer some valuable tax benefits to adventurous investors.

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The fact that Isa investments are free of capital gains tax on income makes them a great way to build up a substantial share portfolio. However, when it comes to passing your accumulated fortune onto your children, or grandchildren, it's a very different matter. Investments in an Isa aren't typically exempt from inheritance tax (IHT). So unless you pass an Isa on to a spouse (spouses can inherit each other's wealth free of IHT, effectively postponing the IHT liability until both partners have died), then on your death, those who inherit the money could lose 40% of those funds, warns Alex Davies, CEO and founder of Wealth Club. The good news is that there is a way to eliminate (or at least reduce) this bill by investing in shares on London's "junior" stock exchange, Aim.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri