How to buy AIM shares

Table of Contents

How to buy AIM shares

Expert Summary

By Alex King, Chartered Accountant and Founder of Generation Money

With some exclusions, AIM shares are exempt from inheritance tax. There’s also no stamp duty on buying AIM shares. You can invest in AIM shares through an ISA and make further tax savings, too. Investing in AIM shares is riskier than investing in shares on the LSE’s main market, though.

To buy AIM shares you will need to decide which investment platform and type of account is right for you. We recommend Interactive Investor. It’s our top-rated Stocks and Shares ISA due to its excellent customer service, great range of AIM shares and funds, and it has lots of tools and features to guide you.

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

The Alternative Investment Market (AIM) is a subsection of the London Stock Exchange and in this guide we cover how to buy AIM shares.

Our team of finance experts will take you through how to buy AIM shares in the UK through a general investment account, an ISA, a SIPP and a LISA.

Table of Contents

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.

Read our guide for all about AIM investing.

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

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. 

Any AIM shares you own must be held for at least two years prior to death to be eligible for business relief at 100%. 

There are some exceptions to the companies which are eligible, though. They must be companies which carry out a trade. That means any companies whose main purpose is investing or dealing in shares or land and property are not eligible for business relief.

There are a number of investment trusts listed on the AIM whose main purpose is to invest in other companies. Some are real estate investment trusts (REITs) whose main purpose is to invest in land and property. These types of AIM listed shares are not eligible for IHT relief.

These companies aside, if you own AIM shares you can pass them on free from inheritance tax when you die provided you owned them for at least 2 years prior to death.

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. Read more in our guide to AIM IHT portfolios.

Remember, though – tax rules can change and 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.

This article is written by Alex, who is a Chartered Accountant and the founder of Generation Money. Alex is an experienced investor and spent more than a decade working in financial services, most recently as a Vice President at Barclays, so you’re in safe hands.

AIM Shares and Stamp Duty

Another favourable tax position with AIM shares is that they’re exempt from stamp duty. Usually, stamp duty is charged at 0.5% on the value of the transaction when you buy shares electronically.

Most brokers will automatically charge you stamp duty when it’s due on share purchases and pay HMRC on your behalf. AIM listed shares are exempt from this.

How to buy AIM shares

The process to buy AIM shares 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.

  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.

How to buy AIM shares in an investment account

If you want to set up an account and buy AIM shares quickly, then a general investment account (GIA), sometimes known as a trading account or just an investment account, is the perfect way to get started.

Interactive Investor

Due to its monthly subscription pricing instead of charging as a percentage of your portfolio, Interactive Investor is one of the lowest cost ISA providers for large amounts. Fees stay the same even as your portfolio grows in size.

It has more than 40,000 shares, bonds and funds to invest in. There’s also a range of investment ideas and funds lists to help you decide what to invest in. Plus, dealing fees are lower than the other major ISA providers and regular monthly investing is free.

Interactive Investor has an ‘excellent’ Trustpilot rating of 4.7 and gets great customer feedback. Its customer support wait time averages under 1 minute, so help is on hand quickly if you need it.

Interactive Investor is regulated by the FCA and has FSCS protection.

You can have as many GIAs as you like, and there are no contribution or withdrawal limits or penalties.

But, you may have to pay income tax, dividend tax or capital gains tax on any gains or income received through a GIA. There are a number of allowances before you’d have to pay tax, but it will come down to your individual circumstances.

Sometimes a GIA is referred to as a dealing account, usually by the more traditional stockbrokers. Read more in our guide to the best investment apps in the UK.

How to buy AIM shares in an ISA

An Individual Savings Account (ISA) is a government approved way of saving and investing without paying tax. 

Through a Stocks and Shares ISA, you can invest in shares, bonds and funds without paying income tax, dividend tax and capital gains tax on your investments.

Whether you’re going to buy AIM listed shares or not, you should consider opening a Stocks and Shares ISA as a great, tax-efficient way of building an investment portfolio. You can contribute up to £20,000 a year into a Stocks and Shares ISA.

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.

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 more about ISAs in our guides to the cheapest Stocks and Shares ISA and the best Stocks and Shares ISA for beginners.

How to buy AIM shares in a SIPP

Whether you already have a self-invested personal pension (SIPP), or want to open one, you may be thinking about adding AIM shares to your portfolio. 

A SIPP is a great, tax-efficient method of saving for your retirement, with lots of investment options and control over how you invest. Read more about SIPPs in our dedicated SIPP guide.

If you want to buy AIM shares in a SIPP, then we recommended AJ Bell as our number one SIPP provider:

AJ Bell

For its huge range of investments and low pricing, AJ Bell is our top pick for best SIPP. 

There are thousands of shares, funds, ETFs, investments trusts and bonds to choose from. Plus, 4 ready-made portfolios if you don’t want to pick your own investments.

AJ Bell is also known for its excellent customer service and it has a Trustpilot rating of 4.8.

Capital at risk if you invest.

For a full range of SIPP providers and to see more on why we ranked AJ Bell top, read our guide to the best SIPP providers. AJ Bell is also one of the cheapest SIPPs.

How to buy AIM shares in a Lifetime ISA

Lifetime ISAs (sometimes referred to as LISAs) are tax-free savings and investment accounts designed to be put towards your first home, or for retirement. 

You have to be an adult aged 40 or under to open a Lifetime ISA and can contribute up to £4,000 a year. This also counts towards your overall ISA annual allowance of £20,000. 

The great benefit of a LISA is that the government gives you a 25% bonus on all your contributions. 

That can really add up over time, so you should strongly consider opening a Lifetime ISA if you’re eligible. But, there are strict penalties for withdrawing money for any other reason than to buy a first home or for retirement.

Hargreaves Lansdown

Not all investment platforms offer a Lifetime ISA but Hargreaves Lansdown does and it’s one of the lowest cost out there.

There’s a huge range of investments, great customer support and no transfer or exit fees.

How to buy AIM shares in a Junior ISA

A Junior ISA is a tax-efficient savings and investment account for children, which can only be opened by a child’s parent or guardian. 

Once opened, anyone is able to contribute, such as grandparents, and there’s an annual limit of £9,000. All gains and income generation within a Junior ISA is free from income tax, dividend tax and capital gains tax. 

To buy AIM shares in a Junior ISA, you’ll need to first open a Junior ISA account for your child. Our top-rated Stocks and Shares Junior ISA is with Hargreaves Lansdown.

Hargreaves Lansdown

The UK’s largest retail investment platform, Hargreaves Lansdown, is our top pick for the best Junior Stocks And Shares ISA.

It charges no account or dealing fees at all – including on US shares – and has the widest range of investment options, as well as great customer service.

For more on Junior ISAs and why we rate HL as number one, read our full guide to the best Junior Stocks and Shares ISAs

How to buy AIM shares through a fund

There are two main ways to buy AIM shares through a fund:

1. Investment funds benchmarked against an AIM index

There are mutual funds and investment trusts which focus on investing in AIM-listed shares. 

However, they may also include other small-cap UK shares not listed on the AIM. Usually, they’ll be small companies with a Main listing on the London Stock Exchange.

To invest in these funds, you’ll need to search for one of the Numis AIM index benchmarks. These will show you the funds that benchmark themselves against an AIM-focused index and therefore are likely to invest in AIM shares.

We cover this in more detail in our guide to AIM ETF alternatives.

We recommend Interactive Investor for investing in AIM funds.

Interactive Investor

With over 400,000 customers, Interactive Investor is one of the largest investment platforms in the UK.

It has over 40,000 shares and investments to choose from, fees which get cheaper the more you invest and one free trade per month. Its customer service is top-rated, too.

Here’s an example of a fund that benchmarks its investment performance against the ‘Numis Smaller Companies Index plus AIM’:

How to buy an AIM fund on Interactive Investor
An example of an AIM focused fund on Interactive Investor’s app

Read more about investing in AIM funds.

2. Specialist AIM IHT ISA funds

I know what you’re thinking – ‘AIM IHT ISA’ is a mouthful of abbreviations.

These are specialist ISA products which invest in AIM stocks for the purpose of being compliant with business relief from Inheritance Tax. Think of a Stocks and Shares ISA with the sole purpose of investing in AIM shares to shelter your money from inheritance tax.

In effect, the main purpose of putting your money into an AIM IHT ISA is to protect from inheritance tax. The provider of the AIM IHT ISA will invest your money in AIM listed shares which qualify for business relief. 

The fund manager will, of course, seek to maximise returns on your investment in AIM shares, too.

There’s usually a minimum investment of at least £20,000 (the annual ISA allowance) to invest in one of these funds. That can either be in cash or via an ISA transfer.

Should you buy AIM shares?

If you’re reading about how to buy AIM shares, you’re probably already thinking ‘should I buy AIM shares?’.

We cannot help you with that one, as we don’t give investment advice. It’s down to you to do your own research on AIM shares and make your own investment decision. 

But, we have outlined some of the potential tax advantages – and risks – of investing in the AIM.

The investment platforms we’ve covered above all have tools and resources available to help you with your research and analysis. We suggest you make use of them.

All of the investment platforms in this guide are regulated by the Financial Conduct Authority (FCA) and are part of the Financial Services Compensation Scheme (FSCS), protecting up to £85,000 of your money in the unlikely event that the platform goes out of business.

Note: to buy AIM stocks and to buy AIM shares means essentially the same thing. Buying stock, or owning stock, tends to be more widely used in the USA than in the UK. 

AIM investment risks

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

AIM shares can be highly volatile and are generally traded in lower volumes so market 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, although this has not been suggested.

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.

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

Start investing

That covers how to buy AIM shares in the UK. Let’s summarise.

First, decide which investment platform you want to use. Then decide which type of account you’d like to invest through (or you may already have an investment account).

Finally, search for AIM shares that you’re interested in on your chosen investment platform, select how many shares you want to invest in and hit ‘buy’.

Alternatively, you can put your money in a fund which invests in AIM shares.

We also explained the potential tax advantages of investing in AIM shares. With some exceptions, AIM shares qualify for ‘business relief’ under Inheritance Tax rules. This means they will not count towards your estate for inheritance tax purposes. 

Tax always comes down to your personal circumstances, though.

Here’s a final reminder of our top picks of each type of account:

You May Also Like

Disclaimer: This article should not be considered financial advice. We do not recommend that you buy AIM shares, nor do we recommend that you do not buy AIM shares. No view is held or given on the present or future value of any investment mentioned in this article or elsewhere on our site. You should do your own research and make your own investment decisions. Investments may rise or fall in value; your capital is at risk if you invest.

Tax rules and laws may change and your tax position is down to your own personal circumstances.

Any company information or statistics mentioned were correct at the date of publication but may have changed since then.

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