The head of London’s junior stock market has urged the Government to restore tax incentives for investors in AIM, warning that proposed changes to inheritance tax (IHT) relief risk worsening the outflow of companies.
Marcus Stuttard, who oversees AIM at the London Stock Exchange, told PA News that plans to reduce IHT relief on AIM-listed shares from 100% to 50% next April would deal a major blow to the market..
Stuttard called on ministers to support AIM with renewed financial incentives and stronger domestic investment.
He also welcomed proposals to boost pension fund allocations to UK equities, stressing the need for homegrown backing of British businesses.
AIM is shrinking fast, with 89 companies leaving last year and 71 gone already this year, pushing AIM to its lowest number of listed firms ever, just 679. For AIM to survive and thrive for another 30 years, it must confront and overcome several pressing challenges.
At its core, AIM was designed as a light-touch alternative for growing businesses to access public capital.
But over time, compliance and listing costs have ballooned, with many companies facing bills of £500,000 or more annually. Coupled with falling trading liquidity and subdued valuations, this has made AIM less attractive to smaller companies.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, sums up the predicament: “AIM remains one of the most successful markets globally for smaller growth firms, but the number of companies listed has fallen by around 60% since 2007. Without reforms, it risks losing relevance.”