AIM-market at risk from CGT dithering

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

Small business in final CGT plea

Read
story in The Daily Telegraph

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