The potential removal of inheritance tax relief on AIM-listed shares in the upcoming UK Budget has sparked concerns among investors, with many viewing the change as "painful" and "unnecessary".
However, Marcus Stuttard, head of AIM and UK primary markets at the London Stock Exchange, doesn’t expect Chancellor Rachel Reeve’s impending tax raid to be a death knell for the junior market.
“It would be painful, it would be unhelpful, but I have confidence that we’ve got a much more broadly based market than one that’s just reliant on a single tax break,” Stuttard told City executives at a Thursday gathering.
Approximately £6.5 billion of AIM’s total market capitalisation, which stands at close to £75 billion, is held by funds aimed at mitigating inheritance tax, said Stuttard.
“(AIM) didn’t fail when taper relief was withdrawn; it didn’t fail when retail was pushed out of the market, when the prospectus regime came in,” he added.
However, Stuttard conceded that heightened fears over the 30 October Budget, which Labour has warned will be “painful”, have depressed AIM valuations in recent weeks.
Approximately £6.5 billion of AIM’s total market capitalisation, which stands at close to £75 billion, is held by funds aimed at mitigating inheritance tax, said Stuttard.
Despite Stuttard’s casual optimism, others at the gathering were much more doom and gloom.
AIM is “in decline” and “no longer fit for purpose”, with “a persistent lack of liquidity, dwindling funding opportunities, low trading volumes and erratic share price movements”, bemoaned Myles Milston, chief executive of capital markets fintech Globacap.