Benefits of trading AIM
The main reason AIM exists is to provide funding to fuel the growth of small international companies. This is one of the main benefits and exactly why so many investors are drawn to AIM. With success stories like ASOS, FEVER-TREE, Majestic Wines and Burford it is easy to see why. But the downside can be just as impressive, with many companies disappearing from the market due to scandals or failed business plans.
Stamp duty and stamp duty reserve tax
AIM shares are exempt from stamp duty, thus saving the 0.5% tax, which would be due on the main listing of the London Stock Exchange.
The Government were looking to aid the growth of small and medium enterprises and in 2014 the Finance Bill was introduced to abolish stamp duty and stamp duty reserve tax (SDRT) on transfers of unlisted securities traded on a recognised growth market’.
Inheritance tax (IHT)
Business Relief (BR)
Business Relief (BR) provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets at a rate of 50% or 100%. Therefore achieving exemption from inheritance tax for a sizeable majority of shares on AIM.
This is because they are counted as being unquoted and under the Business Relief (BR) rules, shares in unquoted businesses are exempt from inheritance tax (IHT).
The holdings qualify as long as they are held in the estate for two years at the time of death.
Capital gains tax (CGT) gift relief
The CGT liability can be postponed until the receiver sells the stock.
Tax is a very complex subject and tax treatment is dependent on each of the individual’s personal circumstances and may be subject to change in the future. We would always suggest seeking professional advice before making any investment decision.
A guide to AIM tax benefits has been put together by the London Stock Exchange Group and RSM. Click to review