Question
Why is it that HMRC does not allow ISA investors to hold AIM-listed shares in their portfolios if such investors are willing to accept the limitations of AIM shares? After all, one may include corporate bonds and even hedge funds in this vehicle.Answer
Sadly the decision seems to be based more on a technicality than common sense. After all, you can hold shares listed on the US NASDAQ exchange within an individual savings account (ISA) – and NASDAQ and AiM both tend to have similar types of companies (small) listed on their exchanges.
The reason HMRC does not recognise AiM as a stockmarket is that AiM shares and securities are not admitted to the 'official list' maintained by the UK Listing Authority (UKLA), which happens to be the Financial Services Authority (FSA).
As far as I can see this is the only reason AiM shares cannot be held within in an ISA, I don't think HMRC has gone out of its way to preclude them.
If a share is listed on both AiM and a stock exchange recognised by HMRC then it may be held within an ISA, but such companies are obviously few and far between.
As an aside, AiM shares (with some exceptions) do qualify for business property relief. This means that provided you hold qualifying AiM shares for at least two years they normally fall outside of your estate for inheritance tax purposes.
Why is it that HMRC does not allow ISA investors to hold AIM-listed shares in their portfolios if such investors are willing to accept the limitations of AIM shares? After all, one may include corporate bonds and even hedge funds in this vehicle.Answer
Sadly the decision seems to be based more on a technicality than common sense. After all, you can hold shares listed on the US NASDAQ exchange within an individual savings account (ISA) – and NASDAQ and AiM both tend to have similar types of companies (small) listed on their exchanges.
The reason HMRC does not recognise AiM as a stockmarket is that AiM shares and securities are not admitted to the 'official list' maintained by the UK Listing Authority (UKLA), which happens to be the Financial Services Authority (FSA).
As far as I can see this is the only reason AiM shares cannot be held within in an ISA, I don't think HMRC has gone out of its way to preclude them.
If a share is listed on both AiM and a stock exchange recognised by HMRC then it may be held within an ISA, but such companies are obviously few and far between.
As an aside, AiM shares (with some exceptions) do qualify for business property relief. This means that provided you hold qualifying AiM shares for at least two years they normally fall outside of your estate for inheritance tax purposes.
Read this Q and A at http://www.candidmoney.com/questions/question136.aspx
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