EIS law change to benefit the AIM Stock Market in 2013
New EIS rules are set to propel The AIM Stock Market forward in 2013 as the market of choice for smaller growing companies seeking investment capital, and for savvy experienced investors looking to invest in tax efficient growth stocks.
Online PR News – 13-February-2013 – 2/11/2013, London, UK – London, UK New EIS rules are set to propel The AIM Stock Market forward in 2013 as the market of choice for smaller growing companies seeking investment capital, and for savvy experienced investors looking to invest in tax efficient growth stocks.
2012 was a tough year for AIM. In spite of this, the combined market value of the companies listed on the market was £63b at the end of the year. More importantly, companies on AIM between them raised over £3b in growth capital.
For investors, with traditional asset investments such as bonds and property having delivered unspectacular returns in recent years, the prospect of tax efficient alternatives such as AIM EIS investments is unsurprisingly attractive. Two major legislative changes in 2012 are bringing the London Stock Exchange's junior stock market, AIM (the Alternative Investment Market) squarely into their sights in 2013.
The purchase of newly issued shares of AIM stock market companies has, over recent years, qualified for enterprise investment scheme (EIS) tax relief. But in 2012, the rules changed significantly in favor of private investors.
A key rule change in April 2012 doubled the annual allowable EIS investment per investor from £500,000 to £1m and, at the same time increased the amount of funds an EIS qualifying company could raise in a year from £2m to £5m.
If that wasn't enough good news, the rules governing the qualifying criteria of companies able to access EIS funds were changed. The key changes were an increase to the size limit of EIS qualifying companies balance sheets, and the numbers of employees that companies were permitted to have in order to qualify for EIS.
This means that a new class of larger, more mature AIM companies are able to qualify for EIS investment, which is good news for the companies and good news for canny experienced investors looking for investment in growing AIM stock market companies.
The second more recent development was announced on publication of the 2013 Finance Bill. It had previously been proposed to cap the amount of income tax relief that a taxpayer could receive (from the 2013/14 tax year onwards), which would have threatened to limit tax relief on losses on EIS investments. The new bill now has a carve-out for shares in EIS qualifying businesses.
The investment case for tax efficient investment in EIS qualifying AIM companies has now gathered new momentum. The combination of these two developments will no doubt have a positive effect in encouraging more investment in companies listed on The AIM Stock Market in 2013.
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