The Budget 2013: Growth market boost as stamp duty tax on AIM shares eliminated

Companies trading on the Alternative Investment Market have received a boost following George Osborne's fourth Budget announcement.


Companies trading on the Alternative Investment Market have received a boost following George Osborne’s fourth Budget announcement.

Stamp duty reserve tax on shares in AIM and ISDX quoted companies will be abolished from April 2014.

In his Budget speech, chancellor George Osborne said that the government will get rid of the 0.5 per cent tax to ensure that the UK becomes the place where individuals can raise and invest money.

Outlining his plans, Osborne said, ‘Many observers of the British tax system complain that it has long biased debt financing over equity investment.

‘So today I am abolishing altogether stamp duty on shares traded on growth markets such as AIM.’

More on AIM:

Brett Williams, managing partner at Old Burlington Investments, comments, ‘We welcome the chancellor’s decision to abolish stamp duty on shares traded on growth markets such as AIM as this will encourage investment in the country’s smallest businesses. 

‘As well as having the potential for bringing about crucial economic growth, this will be attractive for investors who are looking to supplement mainstream assets and create more balanced portfolios.’

Williams says that the case for investing in AIM is particularly ‘attractive’ when considered alongside the Enterprise Investment Scheme (EIS), which was changed in favour of private investors last year. Regulation introduced in April 2012 doubled the annual allowable EIS investment per investor.

More on the Budget 2013:

The news is the second recent announcement that is set to provide AIM with a boost in its fortunes. In September 2013, it was announced that the UK government would be joining forces with the London Stock Exchange in an effort to make entry to the public market easier for entrepreneurs. 

The changes will reportedly feature reformed rules on free float, eligibility criteria and reporting requirements.

Among the alterations, technology firms may be able to reduce the free float, the proportion of shares available to buy, from 25 per cent to 10 per cent.

Gavin Oldham, chief executive at The Share Centre, says, ‘Transactions on AIM shares represent c.30% of all equity deals at The Share Centre, and self-directed investors can provide a substantial boost to the financing needs of SMEs. These changes will make a huge difference and we would call for the chancellor to bring them forward to pre 2014.

The abolishing of stamp duty on AIM shares particularly addresses the imbalance between trading costs as compared with spread betting, and should result in many higher risk investors returning to the vital AIM market to help raise new money for SMEs.’

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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