RE: Technicals24 Oct 2024 11:02
Reading a lot about BR at the moment. Considering the original reason for setting it up it does concern me that it will be scrapped. With the market disruption already seen over the past few weeks you would think she would have dispelled any false rumours. Fingers crossed she leaves it as it is.
Why was business relief set up?
"Business property relief legislation came into force in 1976 for family firms passed down through generations so that inheritance tax bills wouldn’t put a privately-owned business into liquidation. It was subsequently expanded to include holdings in businesses quoted on London’s AIM stock market following concerns that such investments were harder to sell quickly than shares on London’s Main Market. While AIM stocks are typically smaller in size versus ones in the FTSE 350 index, it’s fair to say that liquidity has improved since the junior market launched in 1995."
Consequences of scrapping it...
"Ahead of the budget on October 30, a group of AIM listed companies and City think tank New Financial have added to growing warnings around the health of London’s junior stock market amid rumours the Chancellor Rachel Reeves is considering scrapping an inheritance tax exemption on AIM shares.
Shares on the market currently enjoy a tax-break which relieve them from the levy if they have been held for at least two years. Reeves has been urged to ditch the relief in a move which could raise around £1.6bn a year, according to the Institute for Fiscal Studies.
However, the suggestion has triggered furious pushback from the companies amid fears the move could gut the market of some £6bn of investment from specialised inheritance tax vehicles.
In a new report published today, City think tank New Financial warned the move would be “dangerous” for AIM after two decades in which London’s markets had already become a “burning platform”.
“The ‘nuclear option’ of abolishing the business relief that effectively exempts investments in most AIM stocks from inheritance tax would cause huge disruption and we would not recommend it,” the group, headed by William Wright, said.
“Far from abolishing it, the government could commit to extend it to at least the end of this parliament,” it added.
City broker Peel Hunt has warned that shares could dive as much 30 per cent should Reeves decide to end the relief. The move would also dent overall tax revenue to the tune of £3.2bn due to a reduction in corporation tax receipts, it has predicted."
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