AIM Investing – all you need to know

Table of Contents

This page covers all you need to know about AIM investing, and provides links to all of our AIM investing guides.

AIM investing can give you access to high-growth companies and comes with potential inheritance tax (IHT) savings. There’s also no stamp duty on AIM shares. Risks with AIM investing include lack of liquidity and share price volatility, though.

Our team of finance professionals cover how to buy AIM shares, funds and how to invest in specialist AIM IHT portfolios. We also cover the risks of AIM investing and how AIM shares can potentially get 100% relief from inheritance tax.

Table of Contents

Our AIM guides are written by Alex and Talal. Alex is a Chartered Accountant, experienced investor and the founder of Generation Money. Talal is a CFA qualified former institutional investment advisor and private equity associate. So, you’re in safe hands.

Get started with AIM investing

The best way to get started with investing in the AIM is through our top-pick investment platform, Interactive Investor. You can buy AIM shares and invest in AIM focused funds with them.

Interactive Investor

We recommend Interactive Investor as our number one Stocks and Shares ISA provider. It’s one of the largest investment platforms in the UK, has a huge range of investments and excellent customer support.

What is the AIM?

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE).

It’s geared towards smaller and high-growth businesses. Prior to 1995 it was known as the Unlisted Securities Market.

Companies listed on the AIM face fewer regulations than those on the Main Market LSE listing. For example, there are no requirements around the amount of cash a company must hold or the number of shares they must issue. 

These factors make the AIM an attractive option for smaller companies to float their shares. The AIM has also attracted a number of foreign companies seeking to list their shares in the UK but without having to comply with the more restrictive regulations of the main LSE market. 

Whilst there are benefits to companies in facing less regulation on the AIM, overall it’s seen as a riskier stock market to invest in. 

It’s been referred to by some as the ‘wild west’ of the London Stock Exchange. But, there are lots of success stories – Asos plc being one well-known company which graduated from the AIM to a main LSE listing.

As we’ll see next, though, there are other reasons that you may want to buy AIM shares beyond investment gains.

Why invest in the AIM?

Investing in the AIM should be considered for several reasons. Early stage companies are often listed on the AIM so there’s the potential to invest in companies which may see fast growth in the future.

There are also potential tax advantages from investing in AIM shares. The main reasons to invest in the AIM are:

  • Exposure to potentially high-growth companies
  • A way of investing in UK focused businesses
  • Possible inheritance tax relief on AIM shares
  • No stamp duty

We cover the potential tax advantages in more detail below. You should also be aware of the risks of AIM investing, which we cover further below.

AIM Shares and Inheritance Tax

For the purposes of inheritance tax (IHT), AIM shares are considered ‘unquoted’ by HMRC. Unquoted shares are eligible for ‘business relief’ under inheritance tax rules.

This means they are exempt from the value of your estate when calculating it for IHT purposes. Technically, they get IHT relief at 100%, rather than a ‘true’ exemption. 

Not all AIM shares will qualify, though. There are further criteria for AIM shares to be eligible for business property relief:

  • They cannot be investment trusts, including Real Estate Investment Trusts (REITs), or any business whose main purpose is to deal in shares or land and property
  • It must be a ‘business’, which means that its purpose is to carry out a trade or profession for gain. So, no not-for-profit organisations
  • The company should not have a secondary listing on a ‘listed’ stock exchange anywhere in the world
  • You must hold the shares for at least 2 years prior to death

HMRC does not prospectively decide which AIM shares qualify for business property relief. So, you can’t ask HMRC if a particular investment will qualify. HMRC only assesses claims when they arise, i.e. upon death and the calculation of an estate for inheritance tax purposes.

There are specialist AIM IHT funds which invest in companies that the fund managers are confident will qualify for IHT relief. Read more in our guide to AIM IHT portfolios.

If you invest in AIM shares through an ISA, you will also not have to pay capital gains tax or income/dividend tax on any gains made or dividends received.

Overall, buying AIM shares can be a very attractive proposition from a tax perspective.

Remember, though – tax is down to your personal circumstances and tax rules can change. There’s no guarantee the government will maintain IHT relief on AIM shares in the future.

Read our full guide to AIM shares and inheritance tax for more info.

AIM Shares and Stamp Duty

AIM shares are also exempt from stamp duty

Most shares traded in the UK are subject to 0.5% stamp duty which goes to HMRC. Investment platforms and brokers will usually automatically charge you stamp duty when it’s due on share purchases and pay HMRC on your behalf.

HMRC states that shares listed on a ‘recognised growth market’ are exempt from stamp duty. The AIM is listed by HMRC as a recognised growth market, so no stamp duty is payable when dealing in AIM shares.

How to buy AIM shares

The process to buy AIM shares yourself is simple:

  1. Choose the best investment platform for you
    We outline the best investment platforms for buying AIM shares below, depending on how you want to invest. Read our full guide on how to buy AIM shares for more.
  2. Open the right type of account with them based on your needs
    You’ll need to decide whether you want to use your ISA allowance to buy AIM shares, or do so through a general investment account (GIA).
  3. Search for AIM shares or funds on their platform and trade or buy AIM shares
    Once you’ve done the above two steps, it’s time to buy AIM shares. You can browse AIM shares on your chosen investment platform. Or simply search for an AIM listed company that you want to buy shares in.

Interactive Investor is our recommended platform for buying AIM shares. 

Interactive Investor

We recommend Interactive Investor as our number one Stocks and Shares ISA provider. It’s one of the largest investment platforms in the UK, has a huge range of investments and excellent customer support.

Read our full guide on how to buy AIM shares for more.

Interactive Investor, like all of the investment platforms we cover, is regulated by the Financial Conduct Authority (FCA) and is part of the Financial Services Compensation Scheme (FSCS). The FSCS protects up to £85,000 of your money in the unlikely event that the platform goes out of business.

AIM ETFs and tracker funds

Instead of investing in individual AIM shares you may be wondering about investing in an AIM focused ETF or tracker fund.

Unfortunately there are no ETFs that track the AIM, but we cover the other ways of investing in AIM funds in our AIM ETF tracker guide.

AIM investment risks

When investing in AIM shares there are additional considerations beyond the usual warning that your capital is at risk.

AIM shares can be highly volatile. They’re generally traded in lower volumes than main market shares so prices can quickly move up or down. Investing in the AIM should be considered part of a diversified investment portfolio. 

It’s also important to remember that the tax status of AIM shares can be changed by the government or HMRC.

For example, a new government could impose stamp duty on AIM shares. There’s no currently no suggestion that the current or imminent future government will do so.

Similarly, the government could remove inheritance tax exemptions on AIM shares. If it did, then the value of AIM shares could rapidly fall as people seek to exit their investments made for IHT purposes. This could mean a major loss on your AIM investments.

As we mentioned above, HMRC does not prospectively confirm the eligibility of any shares for business property relief. It is only when the relief is actually claimed that HMRC will confirm eligibility.

So, there is always a risk that HMRC will rule one of your investments in AIM shares to not be eligible. That should be unlikely, though, if you have bought AIM shares for IHT purposes and followed the guidelines.

Finally, although we’ve outlined the current tax situation around AIM shares, tax is always down to your personal circumstances. 

If in doubt, seek regulated advice from a qualified financial advisor or tax accountant. We recommend Unbiased, who will connect you to an appropriate professional for your needs.

Speak To An Expert

Find qualified, independent and regulated finance professionals.
If you’re unsure of your options or financial position you should seek professional advice. Unbiased has over 27,000 financial experts – simply enter your details and they will match you to the best financial advisor for your needs, including a no-fee initial consultation
Find qualified, independent and regulated finance professionals.
If you’re unsure of your options or financial position you should seek professional advice. Unbiased has over 27,000 financial experts – simply enter your details and they will match you to the best financial advisor for your needs, including a no-fee initial consultation

AIM Investing Summary

That covers AIM investing, including the potential tax advantages from doing so. 

You can either buy AIM shares yourself or invest in funds which focus on AIM shares. Alternatively, there are specialist AIM IHT ISA portfolios which aim to maximise the tax benefits of investing in the AIM.

The AIM market hosts companies which are at an earlier stage. This means risks are higher than investing in more established companies – but the growth potential may also be higher.

AIM share prices can move sharply up or down with little warning and the government may also change the tax status of AIM shares in the future. These are some of the risks you should be aware of before investing in the AIM.

For AIM investing, Interactive Investor is out recommended broker.

Interactive Investor

We recommend Interactive Investor as our number one Stocks and Shares ISA provider. It’s one of the largest investment platforms in the UK, has a huge range of investments and excellent customer support.

Get £100 of free trades

Get £100 of free trades when you open an ISA or Trading Account with Interactive Investor, our top pick for for AIM investing.
Capital at risk if you invest. FCA regulated & FSCS protected.

Generation Money Guarantee

At Generation Money our purpose is to help you make better financial decisions. All of our articles are independently written and/or edited by finance professionals and adhere to strict editorial guidelines. This post may contain links which, if clicked, could result in a payment to the site. These links never impact our editorial policy and all rankings and product recommendations remain unbiased. For more details, read how this site is financed.

Get £200 cashback with Interactive Investor

Get £200 cashback when you invest or transfer a SIPP to Interactive Investor. Terms apply.

Capital at risk if you invest. Interactive Investor is regulated by the FCA and has FSCS protection.

Recent Articles