ISA shake-up opens the door to Aim shares

Michael Bow
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JUNIOR stock market listed investments will be eligible for inclusion in ISAs for the first time under new rules announced by the Treasury yesterday.

The change, first flagged by chancellor George Osborne in his 2013 Budget, will allow retail investors to invest up to £11,520 in the 1,000 or so alternative investment market (Aim) listed stocks on offer and benefit from tax-free returns.

Hargreaves Lansdown’s Danny Cox said the move paved the way for an inheritance tax free ISA as Aim stocks benefit from business property relief – which gives a two year exemption from the tax.

“Investors holding these stocks in their ISA for the two year qualifying period should benefit from virtually no lifetime taxes, and no death taxes either,” he said.

The market value of adult ISA holdings is around £390bn; with £190bn of this held in shares. The tax relief is worth £1.75bn alone.

“Today’s changes to ISA rules will allow SMEs to access another source of funding,” economic secretary to the Treasury Sajid Javid said.