Stocks & Shares ISA

AIM ISAs explained

Learn how to build an AIM ISA portfolio to invest in smaller growing companies. Get started with our guide to holding AIM shares in your ISA.

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Important information - investment value can go up or down and you could get back less than you invest. If you're in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

What is an AIM ISA?

AIM stands for Alternative Investment Market, a sub-market of the London Stock Exchange. The AIM allows typically smaller and fast-growing companies to issue shares and raise capital to fund that growth. Investments in AIM shares are also not liable for inheritance tax, making AIM ISAs - also known as AIM IHT ISAs - attractive tax wrappers.

How does the AIM market work?

AIM shares can be more volatile than traditional investments and are often viewed as riskier than more established companies on the Main Market. That could be because of their size, nature of their business, difficulty trading shares, short track record, need for cash to fund growth, or lack of profits. However, including AIM shares in your ISA can be a way to add diversification to a balanced portfolio.

 

Tax advantages of AIM ISAs

Tax-free income and growth

Like any ISA investments, you will not have to pay capital gains tax on profits you make, and you will not be taxed on dividends. AIM shares are also exempt from stamp duty. 

Passing on more wealth

Certain AIM shares qualify for Business Property Relief. This means that after being held for two years, the value of any qualifying AIM shares in your ISA will be excluded from your inheritance tax calculation. You must have held these shares for at least two years and still be holding them on your death for them to qualify for exemption. 

Ease

The AIM market can be volatile and hard to navigate, but our award-winning financial experts can help you. We publish regular news articles on AIM shares to keep you in the know, and our Super 60 investment range features a section on AIM stocks to help you diversify your ISA portfolio. 

AIM investment risks

If your ISA is your primary investment, focusing on potentially more volatile AIM shares is a risky strategy. If you are planning to leave money to your family, a stock market crash could significantly reduce the amount you are able to pass on. It can also be hard to dispose of some AIM shares. Finally, future changes to inheritance tax rules could affect your estate planning. Generally, AIM shares are best viewed as a component of a balanced portfolio.

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Invest for a better future with a great value, tax-efficient AIM stocks and shares ISA. Start today for only £9.99 a month.

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AIM ISA FAQs

The annual allowance for investing in an ISA is £20,000 in the 2021-22 tax year. This is the total that can be invested across any combination of ISAs that you pay into during the tax year. 

There is no specific tax relief for investments in an ISA, as the ISA wrapper shelters any assets it holds from the taxman. Your investments will be exempt from tax on capital gains, income and dividends, and any AIM shares within your ISA will be exempt from stamp duty and inheritance tax (if they qualify for Business Property Relief and you have held them for two years or more on your death). These exemptions will be applied automatically. 

On death, your ISA becomes part of your estate. Any qualifying AIM shares will be exempt from inheritance tax, as long as you have held them for two years or more on your death. 

You can set up an ISA quickly and easily. All you need is your National Insurance number and debit card details to get started. Once you have set up your ISA, you can begin investing in our full range of stocks, including AIM shares. To help you, our Super 60 list provides quality options for any portfolio, including a range of selected AIM shares to help you diversify your holdings. 

You can start investing with ii for just £9.99 per month. This monthly fee covers you for multiple accounts, including Stocks and Shares ISA, Junior ISA and Trading Account (add a SIPP for £10 per month admin fee).