Wednesday, March 20, 2013

The Financial Times - Stamp Duty on London AIM-Listed Shares Abolished

Kate Burgess, Small Companies Correspondent, The Financial Times, London, England

Fans of equities in small companies cheered the 2013 Budget move to abolish stamp duty on shares listed on the London Stock Exchange’s (LSE) Alternative Investment Market (AIM).

Buyers of shares traded on growth markets such as London's AIM will no longer have to pay the 0.5% tax from April next year, adding to the already substantial tax breaks available to investors in London's AIM.

When this regime is in place, it will mean investors in London AIM shares will be able to avoid capital gains tax, income tax, inheritance tax and now stamp duty too.

The decision follows years of lobbying by the London Stock Exchange and the Quoted Companies Alliance (QCA) and should provide a boost to London's AIM.

Gervais Williams, specialist small-cap fund manager at Milton and a QCA director, said: “Removing stamp duty from the purchase of London AIM-listed shares will reduce the cost of investing in London's AIM and stimulate liquidity.  It will also reduce the cost-of-capital for London AIM-listed companies, allowing them to fund growth more easily.”

David Bywater, tax partner at KPMG, said: “Abolishing stamp duty for London AIM-listed companies sends out a message that London and the London Stock Exchange's AIM is the place to list and raise finance for fast-growing companies.”

The Chancellor said the move was part of measures designed to ease access to funding for SMEs, helping to reinvigorate their growth and therefore the economy.

It comes days after the Government said it was consulting on the details of allowing London AIM-listed shares to be held in tax-efficient Individual Savings Accounts (ISAs).  ISAs allow individuals to shelter up to £11,520 annually from capital gains and income tax.

The London Stock Exchange cites analysis from Deloitte suggesting that abolishing stamp duty “in the short-term could cost £72 million, under 3% of overall stamp duty, but it will be revenue neutral in the longer-term due to increased economic activity and higher tax receipts.  It will also allow companies already listed on London's AIM to create up to 26,000 new skilled jobs and reduce the cost-of-capital for SMEs by more than 15%.”

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