AIM shares lose their 10% Capital Gains tax perk

This is the last in my series on changes to UK taxation.

Gains on AIM shares now taxed at 18%

This is more a sting in the tail of the changes to the Capital Gains Tax (CGT) regime we looked at earlier in the week than a wholly new rule.
AIM shares are listed on the Alternative Investment Market. Since most AIM shares were classed as business assets, it used to be possible to pay less Capital Gains tax on gains, provided you held the shares for two years to qualify for the 10% business assets tax rate.

Now all Capital Gains (bar the first £1million that qualify under the special Entrepreneur’s Relief scheme) are taxed at a flat 18%, AIM shares no longer have any special CGT advantage over FTSE 100 shares.

Make a £100 gain on any shares outside of your personal CGT allowance , and you’ll pay 18% tax, whatever the shares you sell. Hardly a way of encouraging money to flow to the riskier start-up businesses that tend to predominate on AIM, but then that hasn’t been on the agenda for a few years now.

AIM shares still have an inheritance tax perk

It is still possible to use AIM shares to reduce inheritance tax. But with the inheritance tax threshold having risen to £600,000 for couples, the number of people who will benefit from doing so won’t be great, especially as most UK wealth is tied up in housing; you can hardly live in a portfolio of AIM shares before you pop your clogs.

Everything you could want to know about UK tax (and much, MUCH more) is available on the Government’s official tax pages. Why not instead subscribe to Monevator to keep cutting to the chase?