The UK Government offers generous tax breaks to encourage you to save, and one of the most popular and accessible is an ISA. You can invest in a ‘stocks and shares’ ISA and/or a ‘cash’ ISA. An ISA, or Individual Savings Account, is not an investment in its own right – rather, the best way to think of a ISA is as a ‘wrapper’ in which you can shelter your savings and investments from tax.
Following a change to the rules on 5 August 2013, shares quoted on the AIM market can now be held within an ISA. This has made it possible to combine ISAs with estate planning by investing in certain AIM shares. This is because the value of AIM shares that carry on certain qualifying trades are exempt from UK inheritance tax if they are held for at least two years, and provided they are still held at death.
The relief you get depends on your individual circumstances and the tax rules may change in future. HM Revenue & Customs law and practice can change over time and investors who are unsure about their tax status should get independent advice from a professional adviser.