Questor: do these Aim stocks qualify for IHT exemption? And should we buy them?

Questor Inheritance Tax Portfolio: not every Aim share can be passed on free from death duties so it’s important to check before you buy

Richard Evans 4 December 2020 • 5:00am

Workers at Young's brewery unbung barrels for filling with beer, December 1974 — Young's was the first stock added to our IHT Portfolio. Pictured, workers at the firm's brewery unbung barrels for filling with beer, December 1974 Credit: Hulton Archive/Evening Standard/Getty Images

Almost a year has passed since we last added a share to our Inheritance Tax Portfolio of Aim-quoted stocks that should qualify for exemption from death duties once held for two years. We will now put that right.

In the past few weeks, the other formats of Questor have thrown up four candidates for inclusion. Two – Synairgen, a drugs firm, and Avacta, which makes “lateral flow” tests and cancer treatments – were in our sights because of their connection with the pandemic; a third, Tekmar, makes protection systems for use in another promising area, offshore energy.

Blancco likewise appears to have created its own niche in secure data deletion. We’ll look at whether they are likely to qualify for the IHT exemption and then decide if we should add them to our portfolio.

The rules for qualification for “business relief”, the official name for the tax perk that allows some assets to be inherited free from death duties, are complex so it can be hard to determine if a particular stock qualifies (in fact you can never be absolutely sure until the time comes to claim the relief from the taxman).

So we asked Investor’s Champion, which specialises in this area, for its view on these four stocks. It said all should qualify.

Now we have to decide whether to include them in the portfolio. We described Synairgen and Avacta as speculative punts when we tipped them so will leave them out of our portfolio. Tekmar is also somewhat speculative but we take comfort from the fact that its products have now reached their 10th generation. Blancco has the look of a leader in what could become a very lucrative field.

We will therefore add these latter two to the portfolio, although readers with a particularly high appetite for risk may want to add one or both of the other stocks too.

Questor says: buy

Tickers: TGP, BLTG

Share prices at close: 72p, 202p

Average gain of IHT Portfolio shares: 21.7pc. Average outperformance: 34.8 percentage points

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