AIM All Shares Index up nearly 4% post UK budget
The AIM All Shares Index is up nearly 4% following the UK autumn budget as the overall tax framework maintains key advantages for AIM investors and introduces elements that could boost market activity.
How the Autumn Budget 2024 Tax Changes Create Opportunities for AIM Investors
The Autumn Budget 2024 introduces several significant tax changes that create both challenges and opportunities for investors in the Alternative Investment Market (AIM). While some measures increase certain tax rates, the overall framework maintains key advantages for AIM investors and introduces elements that could boost market activity and led to a near 4% rise in the FTSE 100 AIM All Share Index, the biggest one-day gain since April 2020.
Maintained Tax Relief Benefits
One of the most important aspects for AIM investors is that Business Property Relief (BPR) will continue to be available for AIM shares, albeit with some modifications. From April 2026, the government will:
- Maintain 100% relief for the first £1 million of combined business and agricultural assets
- Apply a 50% relief rate thereafter for shares designated as "not listed" on recognised stock exchanges, such as AIM.
This graduated approach means many smaller AIM investors can still benefit from full inheritance tax relief while ensuring the system remains progressive for larger estates.
Capital Gains Tax Considerations
The budget introduces a staged increase in Capital Gains Tax (CGT) rates, which will affect AIM investors:
- The lower rate increases from 10% to 18%
- The higher rate increases from 20% to 24%
However, these rates remain competitive compared to many other European countries, helping maintain London's position as an attractive market for growth companies and investors.
Market Liquidity Benefits
The budget includes measures that could enhance AIM market liquidity:
- The introduction of the Private Intermittent Securities and Capital Exchange System (PISCES) with stamp duty exemption for transactions
- Continued support for growing businesses through various investment schemes
Investment Incentives
The government has extended several schemes that benefit AIM investors:
- The Enterprise Investment Scheme (EIS) extension to 2035
- Venture Capital Trust (VCT) scheme extension to 2035
- Maintained Corporation Tax cap at 25% - providing certainty for AIM-listed companies
Strategic Investment Opportunities
The budget's focus on growth sectors creates potential opportunities for AIM investors, particularly in:
- Clean energy and net zero technologies
- Life sciences and biotechnology
- Advanced manufacturing
- Digital and technology sectors
Long-term Market Stability
The budget's broader economic measures support market stability through:
- A strengthened fiscal framework
- Increased public investment
- Support for research and development
- Focus on regional growth and innovation
FTSE AIM All Share Index Technical Analysis
The sharp rally in the FTSE AIM All Share index following the UK autumn budget needs to exceed the late September and mid-October highs at 3,625.68-to-3,635.44 on a daily chart closing basis for the May-to-October downtrend to be breached.
If so, a bullish medium-term reversal could take the FTSE AIM All Share index back towards the July-to-August highs, around the 3,800 mark, up another 5% from current levels.
FTSE AIM All Share Index daily chart
Good support can now be seen between the August-to-September lows at 3,570.75-to-3,542.06.
Conclusion
While the budget introduces some tax increases, it maintains key reliefs and introduces measures that could enhance AIM market dynamics. The graduated approach to tax changes, combined with continued support for growth businesses, suggests a balanced approach that preserves many of the advantages of AIM investment while ensuring fiscal sustainability.
For investors, this creates an environment where careful portfolio planning can maximise tax efficiency while supporting investment in growing British businesses. The maintenance of key reliefs, combined with enhanced market infrastructure and support for growth sectors, indicates continued government commitment to AIM's role in supporting UK business growth.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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