The head of the corporate finance division at accountancy firm Crowe Clark Whitehill welcomed the Treasury’s recent decision to open up shares listed on the AIM market – a subsidiary of the London Stock Exchange – to Isa investors, but highlighted the potential risks.
He said: “It is good to see the Treasury looking for ways to fill the SME funding gap and Isa holdings should broaden the investor base for AIM companies. But the volatility of some AIM shares may make investors reluctant to hold these investments in Isas, as no relief will be available for capital losses.”
Dr Ros Altman, former director-general of Saga and independent policy consultant, said the move could pump much-needed money into smaller companies.
She said: “Anything we can do to ensure more money for small UK businesses must be a positive step for the economy. The sums invested in Isas are close to £400bn, so this is a significant source of potential funds.”
Ms Altman added the move could incentivise savers to funnel some of their savings into smaller companies, since they were earning “paltry” returns on cash.
She said: “This could be helpful to growth, especially when banks are not lending enough.”
| Adviser view |
Adrian Lowcock, senior investment manager at Bristol-based stockbroker Hargreaves Lansdown, said: “This was long overdue. The tax reliefs available on investment, originally the Pep and then the Isa, have always been aimed at encouraging investment and this change to the rules continues this theme. Investors are already able to buy and trade exchange-traded products inside their Isas, some of which are rightly considered rather risky investments by the FCA, so including AIM stocks just brings some consistency to the rules.” |
