In the anticipated Autumn Budget statement, out tomorrow, ?there may be significant changes to Business Property Relief and therefore Inheritance Tax Relief. Opinions vary as to whether the Chancellor will bring in changes that risk damaging the whole of the AIM market, however, if this were to occur, it will create challenges for investors running AIM IHT portfolios and many ?AIM-listed companies. Our advice to AIM clients is not to panic. The elimination or reduction of tax advantages may prompt some capital to shift away from AIM companies, but it also presents new opportunities:
- Buying Opportunities in Undervalued AIM Stocks: Fund managers who prioritise growth over immediate tax benefits may find attractive buying opportunities in undervalued AIM stocks. These investors will likely focus on companies with strong fundamentals, including solid balance sheets, market-leading positions, and innovative capabilities, seeking long-term performance. If tax relief is NOT removed, the recent sell off will be reversed and fund managers will be looking for companies whose share prices have been impacted. This will be the time to proactively engage with investors.
- Stronger Communication of Value Propositions: If tax relief IS removed, AIM companies will need to improve how they communicate their value propositions in a tax-neutral investment landscape. Proactive engagement will be essential to attract new investors. We know that companies who actively communicate with investors outperform those that don’t.
- Reshaping Share Registers: We are already helping companies who may be affected, reshaping their share registers by pivoting to different funds (e.g., UK Smaller Cap Funds) and targeting new investor segments beyond traditional IHT-focused investors.
- Potential Transition to the Main Market: If tax relief IS removed, for certain AIM companies, a move to the Main Market could be a viable strategy to access a broader investor base. Although this transition is complex, it provides enhanced visibility and greater access to capital, and the recent changes to the Listing Rules have made this easier.
- A Gradual Transition: It is unlikely that any changes will happen overnight, and companies will have time to review and broaden their share registers by reaching beyond traditional AIM IHT funds.
We expect that whatever happens in the budget, it should provoke companies to look at their shareholder registers and decide whether or not they think it is properly constructed and to seek advice on how to improve it.?
Capital Access Group has been bringing companies and investors together since 1998 and has market leading depth and capability in this field coupled with a strong sponsored-research offering. If you would like to find out how we can help you please contact us.
