STAMP duty is to be dropped from shares traded on the junior stock market and a capital gains tax holiday for unlisted start-up company shares is to be extended in a bid to encourage more investment in small businesses.
The Stamp Duty Reserve Tax on shares traded on the Alternative Investment Market (Aim) will be cut from April 2014, while Aim-listed shares will also be permitted to be included in Isa’s, a popular savings vehicle.
The change is set to cost the exchequer £170m a year, according to estimates released yesterday.
“This is a small step but at least a step in the right direction,” said KPMG tax partner David Kilshaw.
“With traditional forms of start-up capital harder to come by in the current climate, it is right that the tax system incentivise private finance for new businesses and encourage growth.”
The capital gains tax holiday on shares in small early stage firms – so called Seed Investment Scheme Shares – will be extended but cut from 100 per cent to 50 per cent for gains made in 2013-14 if they are reinvested in seed companies.
The scheme was introduced in last year’s budget.
“Extending the timeframe ... gives added flexibility and encourages further reinvestment in young businesses,” said Katharine Arthur, tax partner at MHA MacIntyre Hudson.
But Deloitte’s Michael Hooke said restricting the relief will “mean another layer of complexity for investors”.