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

REPORT: In case you missed it, we thought you might be interested in a recent report commissioned by the London Stock Exchange that looked at the economic impact of AIM.

Amongst other findings, the report found that in 2023, AIM companies contributed £35.7 billion gross value added to UK GDP.

These findings highlight the potential for AIM to make a valuable contribution to the Labour Government’s mission to support the economy. However, the report emphasises that if AIM is to play a part in this, the Government needs to ensure that the comprehensive and well-calibrated package of fiscal incentives and reliefs are maintained.

The Economic Impact of AIM report was commissioned by the London Stock Exchange and written by Grant Thornton UK LLP. It highlights the significant contributions of AIM companies to the UK economy. Despite challenges such as the COVID-19 pandemic, AIM has continued to support business growth by providing access to capital for smaller, ambitious companies. Since its inception in 1995, AIM has supported over 4,000 companies, raising a total of £135 billion.

The report emphasizes AIM’s role in fostering a diverse and resilient business environment. It notes that 83% of new admissions since 2015 have been UK-incorporated companies.

AIM’s contribution to the UK economy is substantial, with the market enabling companies to achieve significant growth and development. The report also compares the latest data (2023) with pre-COVID figures (2019), providing a comprehensive view of AIM’s performance and resilience.

Overall, AIM continues to play a crucial role in supporting the UK economy by facilitating business growth, providing investor opportunities, and contributing to economic stability and diversity. The comprehensive and well-calibrated package of fiscal incentives and reliefs play a key role in spurring these achievements on.

FIND OUT MORE
To find out more about the benefits of AIM, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected] or phone 01923 713 894.