No more tax raids, AIM boss pleads after junior market targeted in Rachel Reeves budget

The head of London’s AIM market has called on the Labor Party to rule out any further tax raids after it was the subject of Rachel Reeves’ budget.

AIM was hit when the Chancellor halved the inheritance tax relief available for shares in the junior market from 100 per cent to 50 per cent.

That was not as bad as some had feared, amid speculation that the corporate relief tax exemption would be abolished entirely for AIM shares.

But the junior market – which underperformed the rest of the London market before the Budget amid speculation – has continued to struggle since.

AIM boss Marcus Stuttard told the Mail that to close the gap investors must be confident that Reeves will not be back for more.

He said: “The market is looking for some certainty from the government that there will be no further changes to business relief.”

AIM – which is part of the London Stock Exchange Group – argues that, as a key platform for pioneering growth companies to raise funds where they might be scarce elsewhere, it makes an important contribution to the UK economy.

It has enjoyed a number of benefits from tax relief schemes “in recognition of the role AIM plays in supporting this vital segment of the economy”.

But it has declined nearly 10 percent in the past six months. That compares unfavorably with London’s blue-chip FTSE 100, which is more or less stable over the same period.

Stuttard said: “We have very good quality businesses, we have that scale, but what the market wants is that certainty.”

The comments came as Peel Hunt analysts predicted that, far from saving money as the Treasury intended, cutting tax breaks on AIM shares could end up costing more than £2bn.

This is because the fall in the value of the index – from £7bn so far – will mean less capital gains tax will be paid on share sales, while reducing the capital available to growing companies It will mean fewer jobs.

In September, accountants Grant Thornton reported that AIM businesses contributed £35.7bn to the UK’s GDP and directly supported more than 410,000 jobs.