Stocks listed on the Alternative Investment Market (AIM) will be allowed in individual savings accounts (Isas) by the autumn.
Though AIM stocks were originally banned from being used in an Isa, the government launched a consultation in March 2013 to look into removing the restriction.
A statement from the Treasury said it had decided to allow AIM stocks in Isas as “part of the government’s commitment to help smaller companies succeed by promoting investment to deliver sustainable economic growth”.
The changes to the Isa rules now mean that any stock that is listed on a recognised exchange in the European Economic Area will be eligible for an Isa.
The government expects to pass a law ratifying the new rules this month, with the changes due to come into effect in June.
At the end of May 2013, there were 1,087 stocks listed on AIM, with a combined market capitalisation of £34bn.
