Small firms get funding boost from ISA plans

Ben Southwood
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SMALL FIRMS could enjoy a lending boost, depending on the results of a consultation announced yesterday.

The government consultation will consider allowing savers to invest in firms on the alternative investment market (AIM) via their stocks and shares ISA. This came in tandem with a hike in the yearly individual tax-free savings limit – bringing it from £11,280 in this financial year to £11,520 in the next.

The Quoted Companies Alliance, which represents small listed firms, hailed the move as potentially giving its members a significant funding boost. “This is the right time to consider adding AIM-listed companies to the ISA wrapper,” said boss Tim Ward. “It’s hugely welcome, and good fuel for the engines of growth.”

Corporate law expert Clive Garston, at law firm DAC Beachcroft agreed, saying a boost to liquidity could lead to further improvement in AIM firms funding capability.

But Aidan Sutton at PwC called the change “slightly ill-directed tax relief,” pointing out that very few people even use their stocks and shares ISA for main market shares, and suggesting even fewer would venture into riskier AIM investment.