July 2021 has been the best month since December 2014 for IPOs on the AIM market, with 16 new arrivals and five departures.

IGTV’s Jeremy Naylor discusses the sector breadth of the new listings and the opportunities for investors with Chris Boxall from Fundamental Asset Management.

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 17 years, from the link here.

Business Property Relief (BPR) is a valuable tool which can be used to help you reduce your Inheritance Tax bill.

In a nutshell, if you hold a BPR qualifying asset for two years and until death then that asset will be exempt when calculating how much of your estate will be liable to Inheritance Tax on your death.

Unquoted shares in a company fall within the remit of BPR. And crucially, the term “unquoted” has a broad definition which includes companies listed on AIM, the junior market of the London Stock Exchange.

As such, qualifying AIM shares will not count as part of your estate for Inheritance Tax purposes and none will be due on those assets, even if your estate exceeds the threshold at which your heirs would normally have to pay 40% tax.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

One of the golden rules of financial planning is never to “let the tax tail wag the investment dog”. This is true in the case of AIM shares which should not be bought just for the tax break. Although the tax benefits are significant, AIM shares should be bought first and foremost for their investment potential. The good news is that AIM is one of the most successful growth markets in the world. However, it should be considered a high-risk investment.

Interested in hearing more about AIM as one of the world’s most successful growth markets? Then why not watch our webinar session to hear more: Is AIM heading for a fall… or is its outperformance set to continue. 

It is possible for investors to build and manage their own portfolio of AIM investments. However, such an investor will need to be confident in their ability to choose investments wisely, qualify those investments up until the point of their death for BPR qualification, manage their own administration when buying stocks directly and stay on top of any changes to the applicable tax rules.

The alternative is to work with an investment manager specialising in building tax-efficient investment portfolios. AIM shares as part of a well-diversified and professionally managed investment portfolio carefully structured according to your attitude to risk and your financial goals can be a useful way to plan for inheritance tax. AIM shares can also be included in an ISA where investors will benefit further from tax-free income and capital gains on growth.

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 17 years, from the link here.

AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.

AIM, is one of the London Stock Exchange’s great success stories. However, back in 2008 the London’s growth market began to see a decline in the number of new listings. This was a direct result of the financial crisis and the global uncertainty that followed.

Given the nature of AIM, there will always be companies which are taken over by a competitor, merge, delist, join the FTSE main market or occasionally even fail – thankfully the last of these is far less frequent than it used to be. AIM therefore requires a steady flow of new listings to maintain numbers and replace the leavers.

AIM reached its peak in number of listed companies in 2007 at 1,694, when the resources boom saw a lot of small early-stage oil and gas companies and many overseas companies also join, many of which were of questionable quality. In July 2021 this number was at 832, less than half its peak.  Our associates Investor’s Champion cover all the new arrivals to AIM in July in their update here.

Many large companies which could qualify to be on the FTSE main market have become all too happy to remain on AIM, lifting the total market value. There are several reasons for a large company to remain on AIM: Business Relief investment might provide a welcome additional source of capital, they may prefer the reporting regime on AIM, owners and major shareholders might appreciate the Business Relief benefit for their own Inheritance Tax planning. As a result of this, AIM has seen a decline in the number of companies listed but a significant increase in total market value and quality of companies.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

Has this downward trend continued?

No. In fact from Q4 2020, the number of companies joining AIM began to increase and the rate of companies leaving the market began to slow. As a result, by the end of Q2 2021 the number of companies on AIM had increased by 13, raising £664m. The market also broke its record with the largest new admission in the second quarter of the year, as Victorian Plumbing Group raised £298m upon listing, with its market capitalisation £850m. The positive trend has continued with July 2021 the best month since December 2014 for IPOs on AIM, with a couple of very large new arrivals further highlighting the growing appeal of AIM for larger, high-growth companies.

Why are companies listing?

Many believe the reason for the change in direction is because some companies held back on their IPO plans during 2020 due market uncertainty brought on by Covid and Brexit. Going into 2021, the UK Covid vaccine strategy began to roll out which dramatically reduced the number of deaths from the virus. The Brexit deal agreed in the latter part of 2020 gave further reassurance to markets. A combination of the two could be the reason we are seeing more and more companies listing on AIM through 2021.

Interested in hearing more about how AIM for IHT works? Then why not watch our webinar session named All you need to know about investing in AIM for inheritance Tax where we delve into the subject in more detail.

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 17 years, from the link here.

AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.