In his Budget statement, the Chancellor said that he wanted Britain to be ‘the place where people raise money and invest.’
He added: ‘Many observers of the British tax system complain that it has long biased debt financing over equity investment. So today I am abolishing altogether stamp duty on shares traded on growth markets such as AIM.’
Osborne claimed that the cut would directly benefit hundreds of medium-sized UK companies by lowering their cost of capital and would support jobs and growth throughout the UK.
Neil Pamplin, Chairman of the Quoted Companies Alliance Tax Expert Group and Corporate and International Tax Director at Grant Thornton LLP, said: “We are delighted that the Government has engaged with our members and taken a proactive approach towards stimulating investment in growing companies. Removing stamp duty on trading in AIM and ISDX shares has great potential for improving liquidity in those markets and encouraging investors to play an active role in supporting growth in UK PLC.”
Tim Ward, Chief Executive of the Quoted Companies Alliance, said: “The removal of stamp duty on AIM and ISDX shares, together with the recently announced consultation on allowing shares traded on SME equity markets to be included in ISAs, shows that the Government is beginning to respond positively to our call for real action. This will create more fuel for the engines of growth. It is very welcome and now needs to be supported with other initiatives to ensure that growing companies are able to access public capital markets. The UK economy desperately needs equity markets that are fit for purpose in helping companies raise finance, grow and create jobs.”
However, financial planner at AWD Chase de Vere Patrick Connolly advised caution, stating that AIM shares were only suitable for wealthy investors prepared to accept high risks and potential losses.
He added: ‘In only six months from 8 June 2008 to 8 December 2008 the FTSE All-Share AIM Index fell by a staggering 62%. Losses of this size are too great are most retail investors to withstand.’