Stockbroker Brewin Dolphin, UK’s biggest private client adviser, warns Alistair Darling's dithering over planned reforms to the capital gains tax (CGT) regime threatens to cause a false market in AIM-listed shares.
People who were encouraged to invest in start-ups under the Treasury's enterprise-friendly business asset taper relief are delaying any decision to sell stock until the Chancellor clarifies his plans, The Daily Telegraph reports.
If he confirms his proposal to increase the tax rate from 10pc to 18pc, 'there will be a massive sell-off,’ a spokesman told The Daily Telegraph: ‘AIM is illiquid and we feel there is a danger that this will concertina up into a very short period. It would be creating a false market as people sell out purely for tax reasons.’
After reviewing the 63 AIM companies to which it provides advice, Brewin Dolphin found ‘50% of the shares are held by individuals who could be affected by the loss of taper relief’. If the new CGT rules are confirmed, those investors would be ‘under pressure to crystallise gains this tax year’.
Further reading:
Darling slammed over CGT indecision
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