AIM Tax Benefits

Background

As part of your exit plans you may have considered floating on AIM. There are significant tax advantages which are summarised here. The adavantages arise because AIM listed shares are treated as unquoted shares despite being quoted.

The tax benefits for unquoted securities are:

Inheritance Tax

The investments qualify for business property relief:

100% relief if own more than 25%
50% relief if own less than 25% of the qualifying company

Capital Gains Tax - reinvestment relief

Roll-over relief to defer a gain reinvested in a qualifying company
Investment to be made up to 1year prior to gain and up to 3years after the original gain
The company can transfer to the Official List during the 3 years without disturbing the relief

Income Tax - EIS availability

A company can raise up to £1 million per annum from EIS investors

Investors get:

20% tax relief on up to £100,000 per annum
no capital gains tax on first disposal
loss relief, reducing loss to 48% of cost for higher rate tax payer

Qualifying company must maintain its status for three years

Connected persons do not qualify but new directors may be eligible

Income tax - VCTs

New AIM subscriptions are likely to be an important source of investment for VCTs

Further reading

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