Monday, 1 July 2013

AIM Listed Shares to Qualify for ISA

From August, the government have announced that shares in many of the smaller cap companies who trade their shares on the Alternative Investment Market (AIM) will become eligible to be held in a stocks and shares ISA.

Here's a link to the treasury website

This should be a boost to small and medium sized companies as they should be able to raise finance to grow their business more easily in the same way that larger companies listed on the FTSE can raise capital.

For the investor, it means they have the option to include a wider choice of shares under the tax break of an ISA rather than holding AIM listed shares in a separate trading account. Smaller companies tend to be more volatile than the larger companies and possibly riskier.

Some wealthier investors like to hold AIM listed shares as they offer a tax break from IHT when held for two years. These investors will now enjoy further tax breaks on dividends and capital gains within an ISA.

I prefer to hold investment trusts Aberforth and Dunedin Smaller for my exposure to this end of the market. Having disposed of Albermarle last year when they entered the payday loans market, the only AIM share I currently hold is Abbey Protection (see write up from March). I have Vimto maker Nichols on my watchlist - should probably have purchased at the time of this write up grrr!

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