Specialist Tax Portfolio Service Welcome to Rathbones Specialist Tax Portfolio Service Presented by Ivan Teare, Investment Director 18 August 2017

Today’s session will Today’s session isn’t designed to Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Today’s session will give basic inheritance tax facts and figures introduce business relief as a planning strategy Today’s session isn’t designed to provide tax advice provide financial advice

Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Before we start

What is inheritance tax worth Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 What is inheritance tax worth Total receipts according to national statistics 2009/10 £2.396 billion 2016/17 £4.84 billion

Anticipated receipts from IHT? Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Anticipated receipts from IHT? in the Chancellor’s spring budget forecast receipts from inheritance tax are set to reach £6.2 billion in 2021/22

What is driving the increase in values? Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 What is driving the increase in values? Source: Factset The value of investments and the income from them may go down as well as up and you may not get back your original investment. Past performance should not be seen as an indication of future performance. Changes in rates of exchange between currencies may cause the value of investments to decrease or increase.

The nil rate band there is a threshold of £325,000 Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 The nil rate band there is a threshold of £325,000 any unused threshold may be transferred to a surviving spouse or civil partner, increasing combined threshold up to £650,000 has been held at £325,000 since April 2009

The main residence nil rate band Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 The main residence nil rate band from 2017/18, an additional, transferable nil rate band of £100,000 this increases £25,000 per annum until 2020/21 then rises by CPI each year from 2020/21 this is complex and there are catches

What are exempted gifts? Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 What are exempted gifts? Each tax year, you can give away £3,000 worth of gifts known as your ‘annual exemption’ and can carry forward unused annual exemption for one year only. In addition to the annual exemption other exempt gifts include: wedding or civil ceremony gifts of up to £5,000 for a child, up to £2,500 for grandchild or great grandchild or up to £1,000 for a friend or another relative normal gifts from surplus income payments to help with another person’s living costs, such as an elderly relative or a child under 18 gifts to charities and political parties

Potentially exempt transfers Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Potentially exempt transfers Gifting assets is a complex area and some gifts may be liable to inheritance tax Years between gift and death Tax paid Less than 3      40% 3 to 4 32% 4 to 5 24% 5 to 6 16% 6 to 7 8% 7 or more 0% Source: HMRC

Allowances aside what options are available? Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Allowances aside what options are available?

Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Business relief business property relief was introduced as part of the 1976 Finance Act, enabling shares in family businesses to be transferred free of inheritance tax

The link to inheritance tax planning Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 The link to inheritance tax planning business property relief qualifying assets are exempt from inheritance tax where they have been held for a period of at least two years upon the death of the shareholder

Limited to business owners? Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Limited to business owners? not necessarily shareholdings in certain unquoted and Alternative Investment Market (AIM) quoted companies not all trades qualify; mainly dealing in land or buildings or making or holding investments a complex area requiring expertise

What is AIM? the alternative investment market launched in 1995 Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 What is AIM? the alternative investment market launched in 1995 at the end of July 2017, 964 constituents Source: London Stock Exchange

Features of AIM investments Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Features of AIM investments speed – qualifying assets can be removed from the estate for IHT purposes after two years control – the investor retains ownership and access to their assets simplicity – no complicated tax structures, age limitations, health checks or life cover ISAs – from August 2013, AIM shares became ISA eligible replacement relief – allows proceeds from qualifying investments to be reinvested into other qualifying investments without restarting the two year holding requirement liquidity – being quoted on AIM generally means assets can be realised upon request, subject to market conditions

Increased risks of AIM investing Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Increased risks of AIM investing Investment risk heightened through smaller company investment Diversification risk up to 100% AIM quoted direct equities Opportunity risk can only invest when suitable opportunities arise Liquidity risk can be less liquid than blue chip stocks and companies can subsequently de-list from AIM Qualifying risk the company may cease to qualify and the tax reliefs granted may be revoked Tax relief risk those available may change or be removed entirely Investor risk personal circumstances may change the benefits received or the requirement for the invested funds Holding period risk if investments are not held for the relevant period tax relief may be revoked or not achieved

Rathbones Specialist Tax Portfolio Service Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Rathbones Specialist Tax Portfolio Service all clients must be introduced by Financial Advisers a diverse portfolio of AIM quoted smaller companies an external firm of tax advisers are engaged for their opinion on qualifying status of investments investment philosophy of good quality, established smaller companies an experienced management team

Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 An AIM company example Churchill China plc is a leading supplier of table top products to the worldwide hospitality and retail markets. Established in 1795, Churchill China plc is listed by the London Stock Exchange on the Alternative Investment Market (AIM) Employing more than 400 staff in Stoke on Trent, Churchill manufactures high quality ceramic tableware for the hospitality industry. Working with many well known brands and designers Churchill supplies the mid market retailers with an extensive range of tableware and gifts. Committed to manufacturing and service excellence Churchill continues to invest in its people, technology and systems.

Summary there are a range of IHT mitigation options Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Summary there are a range of IHT mitigation options an AIM portfolio is one this is a complex planning area that requires specialist professional advice

Important information Welcome to Rathbones | Specialist Tax Portfolio Service 18 August 2017 Appendix Important information The value of investments and the income from them may go down as well as up and you may not get back your original investment. Past performance should not be seen as an indication of future performance. Changes in rates of exchange between currencies may cause the value of investments to decrease or increase. Information valid at date of presentation. Tax regimes, bases and reliefs may change in the future. Rathbone Brothers Plc is independently owned, is the sole shareholder in each of its subsidiary businesses and is listed on the London Stock Exchange. Issued and approved by Rathbone Investment Management Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW, Registered in England No. 01448919. Rathbones is the trading name of Rathbone Investment Management Limited. Rathbone Unit Trust Management Limited is authorised and regulated by the Financial Conduct Authority. Registered office: 8 Finsbury Circus, London EC2M 7AZ, Registered in England No. 02376568. Trust, tax and company administration services are supplied by trust companies in the Rathbone Group. Provision of legal services is provided by Rathbone Trust Legal Services Limited (‘RTLS’), a wholly owned subsidiary of Rathbone Trust Company Limited (‘RTC’). RTLS is authorised and regulated by the Solicitors Regulation Authority under no.636409. The registered office of both RTC and RTLS is 8 Finsbury Circus, London EC2M 7AZ. RTC and RTLS are registered in England under company nos. 01688454 and 10514352 respectively. Rathbone Investment Management International Limited is the registered business name of Rathbone Investment Management International Limited which is regulated by the Jersey Financial Services Commission. Registered Office: 26 Esplanade, St Helier, Jersey JE1 2RB. Company Registration No. 50503. Rathbone Investment Management International Limited is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority in the UK. Rathbone Investment Management International Limited is not subject to the provisions of the UK Financial Services and Markets Act 2000 and the Financial Services Act 2012; and, investors entering into investment agreements with Rathbone Investment Management International Limited will not have the protections afforded by that Act or the rules and regulations made under it, including the UK Financial Services Compensation Scheme. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Rathbone Investment Management International Limited. No part of this document may be reproduced in any manner without prior permission. © 2017 Rathbone Brothers Plc. All rights reserved.

Specialist Tax Portfolio Service Ivan Teare BA (Hons) Investment Director at Rathbones Began investment career in 1996 Joined Rathbones in 2005 Responsible for Rathbones’ Specialist Tax portfolios. I’d like to introduce to you Ivan Teare, Investment Director at Rathbones. Ivan began is investment career in 1996 & joined Rathbones in 2005. Ivan is responsible for Rathbones’ Specialist tax portfolios which incorporate AIM quoted Inheritance Tax & Enterprise Invesment Scheme strategies.

Disclaimer The opinions expressed herein are those of Rathbones and are subject to change. This presentation has been developed with their current understanding of the industry and it’s regulation. The content of this presentation should not be considered to be advise and independent financial advice should be sought before taking any action. Prosperity Financial Advisors & Stockbrokers is a trading name of Prosperity Independent Financial Advisors & Stockbrokers Ltd. Prosperity Independent Financial Advisors & Stockbrokers Ltd are authorised and regulated by the Financial Conduct Authority (507580).