AIM market sell-off – what we are doing

The week is closing with another big stock market sell-off and, as is once again the case, the shares of smaller companies, particularly those on AIM, are having a tougher time than the blue chips.

Russia’s diabolical invasion of Ukraine has further destabilised a fragile stock market, which was already straining under inflationary and interest rate fears; ironically, in the short term, the risk of the latter has now diminished.

Our previous Blog here shows the stock market reaction to major geopolitical events going back to the Pearl Harbor Attack of 1941.

Mr Market, the manic depressive!

As experienced investors in AIM for Inheritance Tax planning purposes for nearly 20 years, we have unfortunately seen this all before, most recently at the time of the first pandemic lockdown in February 2020 when stock markets fell precipitously, with the AIM market falling 36% in a month. Following this tumultuous and very rapid fall it proceeded to recover strongly, finishing the year up 20% and eclipsing the main UK stock market which remained lower. A similar recovery took place after the financial crisis with the AIM index more than doubling off lows.

Moving forward to the current time, AIM IHT portfolios, in line with the AIM index, are down c20% year-to-date and 25% down from the highs hit at the beginning of September 2021, while the UK main market is down approximately 9.5%.

Selling on AIM has been indiscriminate this week, with even mild disappointment severely punished, and large share price declines for some stocks, as high as 60% in a day in some cases. It should be emphasised that there are rarely stock specific reasons for such dramatic falls, and this is simply the feature of a less liquid market, with plenty of irrational sellers and very few buyers. With a few exceptions, such dramatic share price declines rarely reflect the financial strength or long-term prospects of the companies in question, they are simply a feature of ‘Mr Market’s’ irrational behaviour.

So, what do we do at times like these?

The simple answer is, very little, other than keep an eye out for bargains.

There is certainly no point manically trading, seeking out potential safe havens as they don’t exist, with all small caps being dragged lower, notwithstanding any apparent defensive characteristics. The bid/offer spread also widens and it’s a lot harder to sell at the desired price.

Panic selling, on Mr Market’s terms rather than your own, is always the wrong approach. This incurs unnecessary trading costs and one risks being out of the market when things turn around, as they surely will at some point.

During periods of excessive volatility we recommend clients ignore the manic movements of share prices as they are largely irrelevant, that is unless you need to sell, which we hope is not the case. Think of smaller companies on the stock market as one would an unquoted private equity investment, which does not have the distraction of daily pricing.

Furthermore, as investors in AIM for Inheritance Tax planning purposes, we don’t have the luxury (or disadvantage) of being able to sit in cash and are obliged to remain fully invested, so there is nowhere to hide, even if we wanted to. The advantage of this is that when things do turn around, which they will, portfolios are well placed to benefit, being already invested.

What about valuations?

Companies which joined in AIM in 2021, often with unwarranted valuations, have seen their shares hit particularly hard, with little loyalty being shown by new shareholders. The valuations of many of these were unjustified, often based on unusual market conditions over the pandemic which flattered their growth prospects. Many institutions were naïve to back these at such high valuations and they are now paying the price. The artificial valuations assigned to IPOs, which are priced by brokers and the companies themselves, is a reason why we are reluctant investors at IPO and like to see companies deliver on public markets first.

The valuations of some better-established AIM companies have looked stretched for a while and if growth prospects are determined to be less stellar than originally anticipated (something experienced with one of our stocks this week) share price falls are justified, however, not to the extent that we have seen, as Mr Market’s pessimism becomes excessive.

Conversely, the valuations of some excellent highly profitable companies, with attractive growth prospects, have also been pulled down to extremely attractive levels, offering compelling buying opportunities.

To all-intents and purposes, at times like these, we consider that long-term holders of small cap shares should notionally consider the stock market to be closed, that is unless you are a buyer. With the war only in its first week, the volatility is likely to continue for a while longer.


Fundamental Asset Management


Inheritance Tax receipts are rising – there is a simple solution

Figures released by HMRC in 2021 showed that Inheritance Tax (‘IHT’) receipts reached £4.1 billion between April and November 2021, around £600 million more than the same period in 2020 – that’s tax being paid on wealth, that has already been taxed before!

Following his March Budget, Chancellor Rishi Sunak also chose to freeze the Inheritance Tax allowances for five years, thereby dragging more families into the Inheritance Tax bracket as house prices and stock markets continue to increase and inflation starts to climb.

While it is hard to avoid Inheritance Tax on property, for those with investment portfolios, notably in ISAs, there is a simple solution – a portfolio of Inheritance Tax qualifying AIM shares.

What is AIM?

AIM is the London Stock Exchange’s market for smaller companies. It has developed into the world’s most successful and established market for dynamic high-growth companies.

While AIM is designed to help smaller companies access capital from the public markets, it now includes many substantial £ billion companies – Fevertree Drinks and Jet2 are both AIM companies.

Want to hear more about AIM? Watch our  webinar where we consider what 2022 might have in store for AIM and whether the compelling tax reliefs might be at risk.

You can watch the webinar from our Educational Webinars page here

Benefits of Business Property Relief

AIM shares which qualify for Business Property Relief (or Business Relief as it is now called) and held for at least two years do not form part of the estate for Inheritance Tax calculation purposes and can be passed on after death tax-free. This means AIM shares can be used to mitigate against the 40% potential inheritance tax bill which could apply to these assets.

The two-year clock starts ticking from the time you make the investment in qualifying shares. Subsequent investments start a new clock ticking so accurate records must be kept on different durations. If you sell after two years, you have three years to reinvest the proceeds back into qualifying shares for the benefit to continue without starting the two-year clock again. And lastly, you must be invested at the point of death.

AIM for outperformance

Of even more importance to those considering moving from an existing equity portfolio to AIM, is that many dedicated AIM IHT Portfolio Services (not just our own!), have been producing outstanding results over recent years, significantly outperforming UK main market indices – our own portfolios have delivered outstanding results since 2004, as you can see in our factsheet here.

AIM ISAs and ISA transfers

AIM ISAs have been around since 2013, when the Government changed the rules to allow investors to hold AIM-listed shares within an ISA for the first time. This means qualifying business property relief AIM shares can be held within a tax-efficient stocks and shares ISA wrapper. AIM ISAs get the same tax breaks as other ISAs: any growth or income from the shares is tax-free.

The maximum amount you can pay into an AIM ISA in any given tax year is determined by the ISA allowance at the time as set by the government. For the current tax year 2021/2022 this is £20,000.

An investor can transfer their full current year’s ISA subscriptions or all or part of previous year’s ISA subscriptions into an AIM ISA. Transfers within an ISA should not create a CGT event.

Our page here explains more about the AIM ISA.


IHT solutions used to only be available directly with investment managers, with advisors forced to direct assets off their designated wrap platform in order to access these.

Adviser platforms have now evolved to let clients invest in individual stocks, including those listed on AIM, and even allow Discretionary Fund Managers (DFMs), such as Fundamental Asset Management, to manage portfolios of AIM stocks on platform on behalf of clients.

This means you can offer AIM for Inheritance Tax planning solutions to your clients and keep their assets in one place, thereby retaining the benefits a platform has to offer.

With a platform, clients benefit from reduced dealing, product, custody and investment costs as well as giving them access to investment products they would not normally be able to access by going directly.

Advisers benefit from being able to manage everything in one place, reducing time on administration and allowing for more time to be spent with clients. Furthermore, the platform technology itself allows advisers to take advantage of an advanced reporting system.

Platforms are also beneficial for investment managers like Fundamental Asset. The ability to manage client portfolios in one place and to remove custody risk from our own business model is a key advantage. As such, we are committed to the IFA and platform markets and work closely with our platform partners, including ABRDN Elevate & Wrap (formerly Standard Life Elevate & Wrap), Nucleus, Transact, Ascentric and Funds Network.

Our webinar  gives you a chance to find out more about investing in AIM for Inheritance Tax planning purposes. 


AIM is fast maturing into a grown-up stock market

An article in the Daily Telegraph’s popular Questor column commented on the encouraging evidence of AIM’s centre of gravity tilting away from the ‘get-the-founders-rich-quick outfits’ towards real, well-run businesses with bright prospects.

Telegraph subscribers can read the article here, alternatively, Yahoo! Finance has also kindly provided a free to read version here.

AIM’s fabulous performance in 2020 certainly suggests London’s growth market is indeed a very different proposition to the one we first started investing in for Inheritance Tax planning purposes back in 2004.

AIM ended 2020 with its market value at an all-time high of £131 billion. A record 24 AIM companies were valued at more than £1billion each at the year end and 246 AIM companies were valued at £100m or more, the majority of which were in the £100m – £250m valuation bracket.

After rising 10.1% in December, the AIM index finished 2020 up 20% for the year, an amazing achievement in the circumstances and significantly outperforming the main UK index of 100 stocks in the year, which fell 15%. Specialist research house Equity Development commented how this must be “the biggest one-year differential in AIM’s 26-year history”.

But this was not just a flash in the pan and over the 5 years to the end of December 2020, the AIM All share index has risen 60% whereas the main UK market is up only 11%. We acknowledge that this excludes dividend income, and the main UK market has yielded over 4% per annum over this period. However, as commented on by our associates Investor’s Champion in an article here, 2020 highlighted the fragility of dividends for highly geared companies on the main UK stock market, many of whom have been forced to cut or postpone dividend payments.

As individuals own 25.1% of AIM companies, against just 11.3% of FTSE 100 companies (source: “Ownership of UK shares, UK Government, January 2020”) UK private investors will have benefited very nicely from this outperformance.

It is also worth emphasising that to benefit from the Inheritance Tax planning reliefs, individuals need to own the qualifying AIM shares directly in a segregated portfolio in their own name i.e. the tax benefit cannot be gained through investing via a collective/fund structure. Fundamental Asset Management’s AIM portfolios can also be accessed through a number of adviser wrap platforms.  Our Document Library and Adviser Centre has a wealth of information on investing in AIM Inheritance Tax portfolios.

While it was a poor year for new issues/IPOs, with only 32 new entrants raising £486m, AIM saw a large number of secondary fund raises with a total of £5.27 billion raised, making 2020 the best year for secondary issues since 2010.

Not as illiquid as people think!

The average daily value of AIM shares traded also hit all-time highs at £326m, an increase of £91m per day on 2019. Trading volumes remained strong with c £83 billion of shares traded in the year as a whole compared to c£60 billion in 2019. Those are big numbers (for private investors at least!) and counter the argument that AIM shares are illiquid.

ASOS (LON:ASC) remained the largest company by market capitalisation with a year-end valuation of £4.8bn, ahead of online fashion rival Boohoo Group which was valued at £4.3bn.

Although there has been steep drop in the number of companies on AIM, from a peak of 1,694 in 2007 to only 819 at the end of 2020, the quality of companies is far higher.

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 16 years, from the link here.


AIM for Inheritance Tax planning is not early stage investing

Many are attracted to invest in AIM for the Inheritance Tax planning attractions yet are fearful of the perceived extra risk of investing in smaller quoted companies and the notion that they will have their money locked up in early stage businesses.

While the vast majority of AIM companies are smaller than their peers on the main market, there are now many large companies on AIM, with nineteen valued at more than £1 billion each at the end of October. AIM’s largest company ASOS, which is valued at more than £4 billion, would gain it entry to the FTSE100 index of the UK’s largest companies.

Our philosophy for investing in AIM for Inheritance Tax planning purposes is to stick to well-established, proven and profitable businesses, many of which are often run by their founders who continue to own significant equity stakes. Our AIM for Inheritance Tax portfolios include several companies that have been controlled by the same founding families for several generations.

In eschewing small, early stage ventures, with unproven business models and negligible revenue, we may miss out on the occasional star performer, however, experience has also shown that we also avoid the numerous failures.

Investing in early stage companies requires a large degree of patience. New concepts and technologies take many years, and often decades, to come to commercial fruition. AIM previously attracted many small early stage business, often in the healthcare sector, some of which have seen great success over the pandemic. Rather than raise new capital via a listing on AIM, early stage companies now have access to start-up capital through venture capital, private equity or crowd funding routes. This means that new arrivals to AIM in recent years have largely been better-established businesses, the majority of which are revenue generating and profitable.

The primary attraction for those investing in AIM for Inheritance Tax planning purposes is often the short 2 year qualifying period for assets to fall outside the estate, following the Business Relief rules. Accordingly, while investing in equities should always be viewed as a long-term exercise (5 year plus), the window of investment opportunity for Inheritance Tax planning is somewhat shorter than would normally be the case.

Our webinar ‘The truth about risk in AIM’, highlights the more pertinent risks associated with investing in AIM for Inheritance Tax planning purposes. You can watch the webinar from the link here.


Chris Boxall

Cofounder & Co-Managing Director

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 16 years, from the link here.


Good few weeks for our portfolio companies

Despite their obvious appeal and relevance in our lives, many UK investors surprisingly have little direct exposure in their portfolios to leading US technology groups, preferring instead to invest via a collective investment scheme.

We find it surprising that while much of the UK population is happy to use Amazon, Google, Apple iPhones etc, it isn’t interested in owning some of these fantastic companies. That’s why our general bespoke portfolios, as well as our new Ultimate Stocks portfolio, holds shares in the companies discussed below.

The significant outperformance of the US stock market over the UK over virtually any time period you care to mention, suggests that as reluctant investors in the US market, UK investors are at a distinct disadvantage and destined to underperform. The main UK market is also lagging AIM over recent periods, which isn’t surprising given AIM’s abundance of growth opportunities compared to the many dinosaurs roaming on the UK main market.

Our long term general portfolio holding Microsoft opened results season with its quarterly results last week, reporting 13% growth in sales to $38 billion and profits of $11.2 billion, both ahead of expectations. Having closed the June quarter with $136 billion of cash it certainly has plenty of resources at its disposal, with video app TikTok rumoured to be a potential acquisition target.

Despite the closure of its stores around the world, portfolio holding Apple’s revenues for 4th quarter rose 11% to $59.7bn, a new record and significantly exceeding forecasts of a 3% decline. With a growing portfolio of excellent products and an attractive services business, Apple continues to look in great shape buoyed by a huge cash pile.

Google’s holding company Alphabet was the only one of the big tech titans to report declining numbers, although even these were better than revised expectations as many feared a more significant Covid related decline in advertising revenue.

The Ultimate Stocks portfolio, launched in conjunction with our associates Investors Champion, offers a simple and transparent route for UK investors to gain exposure to these and many other exciting companies.

Moving away from the US, it is great to be able to report positive news from plenty of our AIM holdings, many of whose services and products we also use and come across in our daily lives.

Jarvis Securities, the provider of stockbroking and financial administration services, recently issued fantastic interim results supporting a material increase in its dividend. Jarvis’ “Model B” outsourced arrangement is a great solution for small investment management firms and Fundamental is a client.

Gamma Communications, a provider of communications services to business markets in the UK and Europe, issued a very positive trading update with management now anticipating that full year will be ahead of estimates. With 93% of revenue recurring GAMA is in great shape and well-placed to continue to thrive. Fundamental uses Gamma’s horizon telephone system.

dotdigital, the leading ‘SaaS’ provider of marketing automation confirmed that the pandemic had a minimal impact. Having proved itself in the toughest of markets and with continuing momentum online supported by some fantastic partnerships, dotDigital appears to have an exciting future ahead. While we aren’t currently a client, we have always been impressed with its dotmailer email offering.

Satellite holding Property Franchise Group confirmed a strong performance across the half year as well as a return to growth in the final month of the period which has continued into July. EweMove, its hybrid online/physical sales and lettings brand, set new records for sales listings in June. Those considering a house move should considering using Ewemove.

CVS Group, one of the UK’s leading providers of veterinary services, provided a comprehensive assessment of business over the past few months. The soaring demand for pets over lockdown could offer a big post Covid-19 boost to CVS and the veterinary sector as a whole, and the difficulties experienced by small independent practices may also see an acceleration of the consolidation which could also benefit CVS. The market was clearly impressed, sending the shares up sharply.

Quartix, the supplier of vehicle tracking systems, announced impressive interim results highlighting the attraction of its long-term subscription-based model.

IG Design Group, one of the world’s leading designers and manufacturers of gift packaging, celebrations, stationery and Christmas crackers, reassured with its full year results. As a business serving over 210,000 stores for over 11,000 customers in over 80 countries, IG has a better picture than most of the market environment.

Commercial flooring manufacturer James Halstead’s primary concern was cash flow when the world went into lockdown. With trading conditions improving and the cash position robust they feel able to commit to a second interim dividend. All of us are likely to have walked on James Halstead’s Polyflor flooring at some time in our lives!

Smart Metering Systems, which installs and manages smart meters and carbon reduction assets, chose the perfect time to sell a portfolio of meter assets prior to the pandemic disrupting things. Its latest trading update confirmed that revenue and underlying profit would in line with expectations, reflecting the resilient nature of its business model and index linked recurring revenue.

Moving away from AIM, general portfolio holding Games Workshop, the fantasy games group which is also a constituent of the Ultimate Stocks portfolio, issued excellent results, despite the pandemic shutting down its business for 6 weeks. The extensive results statement is worth a read to gain a full understanding of this unusual high-performing business. The shares moved back to all-time highs and despite the valuation there could be plenty of growth potential in overseas markets.

You can find out more about Fundamental Asset Management’s high performing AIM portfolio service, which has been delivering exceptional investment returns for more than 16 years, from the link here.

Fundamental portfolios hold shares in Alphabet, Apple and Microsoft. For a full assessment of results from all the big technology groups please visit or associated Investor’s Champion site. Fundamental clients get free subscriber access to all premium content.


Opportunities on AIM market after Covid-19?

There is no doubt that Covid-19 has changed the way we view our future. Investors and financial advisers alike are looking for the answers and the way to move forward. One thing we do know is that the show will go on regardless, Covid or non-Covid.

In the headlines this week, Boohoo Group reacted to criticism over work conditions at one of its suppliers and Rishi Sunak announced measures to kerb unemployment as business begin to reopen.

Join me and Fundamental co-founders Chris Boxall and Stephen Drabwell on the 28 July for our webinar: ‘Post-Covid opportunities in AIM you should be paying attention to.’ , where we will be discussing this and more. Find out why Boohoo group has never had a place in Fundamental portfolios and where we see the future for the UK economy and AIM. Click here or on the image below to register.

Last week, Chris and Stephen presented at Intelligent Partnership’s AIM Showcase webinar event where we discussed our response to Covid-19, our AIM portfolio for IHT solution and our views on why you should invest in AIM for growth and not just for potential tax savings. You can watch the videos from the link here.

Lastly, it is sunny around the UK today and due to be this weekend also. Enjoy the reopening of pubs and beer gardens, take care and be safe.

Derek Mclay


You can find out more about Fundamental Asset Management’s high performing AIM portfolio service, which has been delivering exceptional investment returns for more than 16 years, from the link here.


As AIM celebrates its 25th birthday, are the tax reliefs at risk?

A recent article in the popular press has alluded to the potential withdrawal of Inheritance Tax/Business Relief on AIM shares.

As a well-established investor in AIM for Inheritance Tax (‘IHT’) planning purposes, we have become used to regular press mutterings over the 16 years we have been managing our AIM for IHT portfolios. The introduction of an Autumn statement gave the press another opportunity to cover this topic, whether they had anything worthwhile to say or not.

It is also somewhat ironic that the latest press report comes at a time when AIM is probably enjoying the most positive period in its 25 year history, with numerous small AIM pharma and biotech groups at the forefront of developing tests and vaccines in the battle against Covid-19. This has not been possible without the support of their shareholders, many of whom have been encouraged to invest with the added attraction of IHT relief.

While there has always been the risk that tax relief might be removed or restricted in some form, if anything the tax reliefs for investing in AIM have been enhanced over the years. The availability of AIM shares in ISAs from 2013 resulted in a wave of new money finding its way to London’s growth market and the majority of new investment in our AIM for IHT portfolios (and no doubt those of other providers) is now via ISA transfers. The withdrawal of stamp duty on AIM shares in 2014 provided further encouragement.

Business Relief rules in brief
Investments that qualify for Business Relief (formerly Business Property Relief) can be passed on free from Inheritance Tax upon the death of the investor, provided the shares have been owned for at least two years at that time.

The shares of qualifying AIM companies benefit from the Business Relief rules, which were introduced in the 1976 Finance Act by Labour Chancellor Denis Healey. The primary objective at that time was to ensure that, after the death of the owner, a family-owned business could survive as a trading entity, without having to be sold or split up to pay an IHT liability. For the purposes of the Business Relief rules, AIM does not meet the HMRC definition of ‘listed’, accordingly shares in qualifying companies on AIM carry the same Business Relief benefits as private trading companies.

Not all AIM companies qualify for Business Relief and, for a modest outlay, our associated Investor’s Champion’s AIMsearch tool can tell you which do, which don’t, and which are doubtful.

The evolution and maturity of AIM now means that many substantial companies and their shareholders benefit from Business Relief, causing some to question the appropriateness of this attractive tax incentive – AIM quoted boohoo Group, the UK’s fourth largest listed retailer with a market capitalisation of £5.3bn, which would gain it entry to the FTSE100 Index, qualifies for Business Relief purposes.

Intelligent Partnership, the UK’s leading provider of education and insights on alternative investments, has commented how, prior to the last Budget there was speculation that Chancellor Rishi Sunak might alter IHT – from something as radical as replacing it with a lifetime gifting allowance through to reducing or removing some of the Inheritance Tax reliefs, including Business Relief.

The removal of Business Relief would clearly have negative effect on the AIM market. According to Investor’s Champion’s AIMsearch, 65% of AIM companies qualify for the relief and a further 10% offer some qualification, subject to exclusion for excepted assets on their balance sheets. We consider that any impact from the withdrawals of relief may be less significant for larger more liquid AIM companies (Mkt cap £250m+), the share registers of which are now dominated by mainstream institutional investors, rather than AIM for IHT managers. For example, the share register of Fevertree Drinks, one of AIM’s largest and most successful companies with a market capitalisation of £2.4bn and a Fundamental AIM portfolio holding, is dominated by mainstream institutional funds, which hold 39% of the equity. The founders still retain a combined 11.76% but institutions have proved to be keen buyers of their shares in the past. The same applies to many other large, rapidly growing AIM companies, with institutions eager buyers of large parcels of shares if the opportunity arises. This has been notable over the pandemic where numerous AIM fund raisings have been supported by large mainstream institutional investors, as opposed to IHT money.

Furthermore, the premium rating of many AIM companies is less about IHT investor buying and more to do with the attractive growth prospects of many substantial AIM companies compared to the low-growth opportunities available on the main UK stock market.

Sunak ultimately left IHT and Business Relief alone with some speculating that planned tax rises and relief cuts have now been pushed back until after the coronavirus threat has subsided. However, the government re-iterated its support of mechanisms through which growth can be generated, stating: “The government places a high priority on expanding the supply of finance through the cycle to support long-term investment to increase the productive capacity of the economy, across all regions and nations of the UK. This includes, but is not limited to, areas such as infrastructure, SME finance, venture and growth capital”

The UK government will have a need for new sources of revenue in view of the huge cost of supporting the pandemic and, a so-called tax expert quoted in the recent article, commented how the removal of Business Relief could be much more attractive than raising VAT or income tax. However, this seems questionable if one considers the irrelevance of IHT relative to the total UK tax collection, the current corporate funding demands and need to stimulate growth.

The HMRC Annual and Report and Accounts 2018/19 (a must read!) reveals that IHT receipts, which are lumped together with Other taxes, were a meagre £5.3bn, or 0.854% of total tax revenues of £628bn in 2018/19. Wealthy individuals paid £54bn of tax, small businesses £115bn and large businesses £135bn. VAT, which is included in the business numbers, contributed £135.6bn to the overall tax. Inheritance Tax doesn’t even get a specific mention in the HMRC report.

HMRC Statistics indicate the value of Business Relief claimed on unquoted shares was £828m in 2016/17 across 1,480 estates, an average of £559k per estate. Other Business Reliefs were £417m on 848 estates. This implies total tax saved of £498m through the combined Business Reliefs (40% x £828m+£417m) or 0.08% of total tax receipts, if applied to the 2018/19 numbers.

These numbers highlight the irrelevance of IHT relative to the bigger tax take, suggesting the government will need to address the main sources of tax to boost its coffers, rather than tinker with IHT.

Furthermore, it would surely make better economic sense to enhance, rather than diminish, tax incentives for individuals in smaller companies. This would help stimulate growth and ultimately do more to boost overall tax collections by boosting the major tax collection points of PAYE, VAT and corporation taxes.

To avoid the potential pitfalls of a change in the Business Relief rules, the legal profession would like investors to embrace the apparent benefits of using a trust. When the two-year minimum holding period for AIM shares had been reached, solicitors suggest the shares could be put in trust to cement the tax exemption. This could conceivably protect investors from any retrospective change to the rules, although the estate will then be saddled with a costly and unwieldy trust structure which comes with its own set of tax rules and places the investor’s assets in the control of others.

We have experienced on numerous occasions at first hand the added complexity and cost, including outrageous legal fees, imposed on relatively small estates with trust structures in place and would urge investors to think carefully before going down this route.

Since launch on 19 June 1995, AIM has supported nearly four-thousand growth companies in raising over £117bn, 61% of which has been through follow-on fundraisings. The equity fund raisings over the pandemic have seen investors plough £billions into UK companies to help keep them going, removing a further burden from the government and 158 AIM companies have raised £1.9 billion of follow-on capital in the first five months of 2020. Research from Grant Thornton shows that AIM companies directly contributed £33.5bn to UK GDP and supported more than 430,000 jobs in 2019.

The London Stock Exchange’s collaboration with Primary Bid has also broadened retail investors’ access to follow-on equity raisings during this challenging period. Many of these same fund raises have also been supported by founders whose continuing equity interest in their companies is underpinned by Business Relief attractions.

It would be strange timing for the government to remove incentives for investment in companies, large and small, at the time they most need it. In a recessionary climate the greater focus surely needs to be on supporting growth, which will ultimately lead to enhancing the bigger tax collections.

For a limited period, we think the government should actually consider enhancing the tax incentives for investing in the newly issued shares of UK listed companies, whatever their size, whether on the main market or AIM. Now that’s a radical thought!

You can find out more about Fundamental’s high performing AIM portfolio service, including the latest fact sheet for May, from the link here.

Fundamental Asset Management has delivered exceptional investment returns for more than 16 years.