AIM shares and replacement property rules
Wildparaplanner
Member
Hi all,
What are the rules on switching out of one AIM stock and into another, when the holding of the stock to be switched hasn't been held for the full 2 years? Does it reset the 2 year clock as it hasn't been held for the full 2 years, or is it rolled over into the new stock that it is switched into?
Thanks
Comments
Hi,
As I understand it, BR status is only retained on assets that have qualified. But I don't have a link to an HMRC source for that!
https://techzone.abrdn.com/anon/public/iht-est-plan/IHT-business-relief-guide#anchor_3
Hope this link works. If not C&P of the relevant bit below:
Replacement property
If an asset which qualifies for business relief is sold, the relief can be maintained if the asset is replaced by the purchase of a new business asset. The two year ownership period is not reset if the sale proceeds are used to purchase a replacement asset within three years of the sale of the original asset.
Business relief continues to be available if the combined ownership period of the original property and any replacement property covers at least two out of the five years immediately before transfer/death. If the individual dies before the replacement asset is purchased business property relief will be lost.
Where one or more replacements have been made during the five years period, the amount of relief cannot be more than what it would have been had the replacement property not been made.
HMRC take the view that if the value of the original asset is lower than the value of the replacement asset, the excess won't be automatically eligible for relief and a new two year period will start on the excess. This is an anti-avoidance provision and its purpose is to prevent a person who has qualified for relief from purchasing a more expensive business asset shortly before death or making a transfer.