AIM OFEX Portfolio

IHT EXEMPTION AND FAVOURABLE CGT TREATMENT ­ Having your cake and eating it!

Many companies quoted on AIM and certain other markets such as OFEX qualify for both Business Asset and Business Property Relief as the Inland Revenue regards these exchanges as unquoted. This status confers special tax advantages.

WHAT IS AIM / OFEX?

OFEX was established in October 1995 to enable companies to have their shares traded in an unlisted fashion. The OFEX market has historically been used as a springboard to the Alternative Investment Market (see below) and then subsequently to the Official List of the London Stock Exchange.

AIM is the London Stock Exchange’s international market for nascent and growing companies. AIM stands for The Alternative Investment Market.

AIM is maturing and celebrated its eighth birthday on 19th June 2003. By this time a total of £8.3 billion had been raised and 700 companies had been admitted.

WHO IS THE SERVICE FOR?

The service is suitable primarily for three specific groups. The type of portfolio constructed and the stocks selected will be determined by their individual requirements.

(i) Late Stage IHT Relief

Where owing to advancing years the more traditional avenues for IHT planning are closed, an AIM portfolio can help to mitigate an IHT liability as qualifying AIM quoted companies can receive 100% IHT relief if they have been held for two full years prior to death or chargeable transfer.

(ii) Retaining Control and Ownership of Assets Whilst Planning for IHT

For some there may be a desire to reduce an IHT liability but family circumstances may preclude the passing of assets to heirs. A portfolio of AIM quoted companies can be maintained which will allow for the ongoing ownership of assets and receipt of income in an IHT exempt environment.

(iii) An Aggressive Growth Portfolio With Reduced CGT

The AIM and OFEX markets contain many of tomorrow’s winners and substantial gains can be achieved. For fully quoted companies CGT at 40% would be payable, whilst because of accelerated taper relief the effective rate for a higher rate tax payer after two years would be 10%

THE INVESTMENT PROCESS

The management of risk is a vital element of the service and, this is judged on an holistic portfolio basis, as opposed to on individual stock criteria. We look to hold a minimum of 15 stocks as this serves to diversify risk considerably. In addition, within the confines imposed, portfolios will be diversified industrially. Stocks are selected which fulfill our criteria of growth potential, strong management, competitive advantage and value for money. In addition as there is an intention to hold any stock, for certainly a minimum of two years, rigorous research is carried out to ensure that the business profile of each individual company selected for inclusion is sound and, that the company is operating in a low risk business environment.

THE SERVICE AND CHARGES

The AIM Portfolio service is a discretionary nominee service operated and charged at our normal rates as detailed in our schedule of fees. Each portfolio must be bespoke to fit with individual investor requirements. The performance benchmark is the corresponding FTSE AIM index.

FURTHER INFORMATION

Further information about this service, can be obtained from Ashcourt Asset Management Limited, Kings Hill, West Malling, Kent ME19 4UN. Tel no. 01732 520 780.

AAM is authorised and regulated by the Fnancial Services Authority. Ashcourt Asset Management Limited: Registered Office: 11 Tower View, Kings Hill, West Malling, Kent ME19 4UN. Registered in England and Wales with company number 3691998

RISK WARNING

When investing in AIM or OFEX shares, investors should be aware that because the rules for these markets are less demanding than for those of the Official List of the London Stock Exchange the risks are higher. There is a higher risk of an investor losing the money that has been invested. Furthermore, the marketability of these shares is often restricted, investors may have difficulty in selling shares and there is often a big difference between the buying and selling price. This means that investors that have to sell shares immediately after purchase, may get back less than they paid for them. Where an investment is denominated in a currency other than sterling, changes in exchange rates between currencies may cause investments/income to go up or down.

This document has been published and prepared by Ashcourt Asset Management Limited (Ashcourt) for the general interest and benefit of readers. The content reflects Ashcourt’s interpretation as at 14 January 2004 of the law and various tax reliefs available to investors in AIM and OFEX companies and investors should be aware that such law and reliefs may change in the future. Ashcourt does not purport to be taxation experts and any investor should seek specialist independent taxation advice before proceeding.

It is stressed that tax reliefs available from time to time should not be the principal for investment and should never outweigh the commercial criteria of investment proposals. However, they can enhance financial returns as well as assist with an investor’s tax planning.