Tax advantages to investing in AIM shares

It's often asked whether there are tax advantages to investing in AIM shares after the 2008 changes. There are but the main benefit (which was the potential for an effective 10% rate of CGT on disposal) no longer applies to most investors. Instead all investors, whether investing in AIM shares or other shares, will be taxed at 18%. There is the new Entrepreneurs Relief that could apply to AIM shares however the company would need to be your 'personal company' to qualify. A 'personal company' is generally speaking a company in which you hold more that 5% of the shares and are an employee or officer. This will therefore exclude most investors from the new Entrepreneurs Relief. There are still advantages in investing in AIM shares though. The key one is the potential inheritance tax exemption. Shares in trading companies that are unquoted (which includes AIM shares) can qualify for 100% Business Property Relief ('BPR'). This can therefore exclude the benefit of the shares from your estate. The shares may also qualify under the Enterprise Investment Scheme ('EIS') for income tax and CGT benefits.