Holding AIM shares in a SIPP

Can I hold AIM shares in my SIPP?

Yes, you can hold AIM shares in your SIPP. The appeal of a SIPP is often that it enables you to invest your contributions in a vast array of investments.

This includes collective investments like funds and investment trusts through to fixed interest securities, ETFs and direct equities, such as AIM shares. 

What are AIM shares?

AIM shares are holdings in companies listed on the Alternative Investment Market, the London Stock Exchange’s market for small to medium sized growth businesses.

Companies that you may be familiar with that are listed on AIM include the travel firm Jet2, Fevertree Drinks, and fashion retailers ASOS and Boohoo.

Why should I consider holding AIM shares in my SIPP?

Investors are often drawn to AIM shares because they enable them to buy stakes in fast-growing companies, often during the early days.

When you hold AIM shares in your SIPP, your holding will be sheltered from tax. This means you won’t pay any tax on dividends or Capital Gains Tax on your profits when you sell.

What are the risks of holding AIM shares in my SIPP?

Although AIM shares may have more growth potential than the shares of larger and more established companies, they are likely to carry more risk.

To be listed on AIM companies do not need to have a minimum market capitalisation, nor do they require a trading record.

This all means that AIM shares can be volatile; fast growth and impressive returns are not guaranteed. While some might soar, others might quickly plummet and crash. As such, if you want to increase your chances of picking the next big thing, it’s vital you do thorough research into any AIM share you want to hold in your SIPP.

AIM shares and inheritance tax

To encourage investment in smaller companies, most AIM shares can also be free of inheritance tax, so long as you have held them for two years.

This IHT protection applies whether or not the AIM shares are held in a wrapper such as a SIPP or individual savings account (ISA).