BUDGET: our initial response
BUDGET: Response from Fundamental Asset Management
On the back of the first Labour Government Budget for 14 years Fundamental Asset Management have put together an initial response relating to AIM investments.
From April 2026, AIM Shares will only benefit from 50% relief as opposed to 100% relief currently. This means AIM shares will be taxed at an effective 20% Inheritance Tax rate from 6th April 2026.
Other Business and Agricultural assets will still benefit from 100% relief for the first £1 million and thereafter will receive 50% relief, again an effective rate of 20%.
It is our understanding that the £1m threshold will NOT apply to AIM shares.
While we would have preferred 100% relief to remain, we are pleased that the relief hasn’t been removed completely, as was speculated, and still offers compelling reasons to invest in AIM.
The AIM market clearly shares our view as we are seeing a significant rally today in our AIM portfolios. Investors had clearly been worried about the potential scrapping of the relief in recent months and AIM had significantly underperformed other markets. The changes made today should also put an end to speculation for several years to come.
In other changes to Inheritance Tax, bands have been frozen for another two years to 2030 likely resulting in more estates paying Inheritance Tax and inherited personal pensions will be subject to Inheritance Tax.
There were also changes to Capital Gains Tax announced. From today, the lower rate will increase from 10% to 18% and the higher rate from 18% to 24%.
ISA allowances have been frozen until 2030. The limit will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds.
A further potential (positive) upshot of the Budget in regards to AIM shares was that inherited personal pensions will be subject to Inheritance Tax.
As ever with a Budget, it will take some time to fully digest the details but on the surface, solely looking at it from the perspective of our portfolios, the opportunities look positive.
To discuss the above, please contact us on [email protected] or call 01923 713 890
