AIM is a relatively new investment opportunity that many people in Britain are becoming familiar with. AIM is different to traditional investments and as such has distinct advantages and drawbacks which will appeal to different investors. If you are interested in finding out more about AIM investments the following information provides an insight into what it has to offer.Emerging onto the Market
The alternative investment market was introduced in 1995 in place of the Unlisted Securities Market. The London Stock Exchange introduced AIM investments as the new forum for the recognised investment exchange.
AIM is dedicated to helping small businesses increase their potential by supporting them and offering them a platform to reach new investors. AIM focuses on helping businesses by offering them a means of trading stock and providing a market value for their holdings. This helps businesses to raise funds to help them to expand and eventually trade on the London Stock Exchange if it benefits them.Trading on AIM
AIM is unique to other stock exchanges in several ways. The London Stock Exchange is Britain’s primary forum for dealing in stocks and shares. Aim is controlled by The London Stock Exchange but functions independently.
In order to trade on The London Stock Exchange you need to be a public limited company registered with Companies House. Usually large firms with many assets and premises become PLC companies. In order to register your business it needs to meet the requirements of a PLC company. Your business needs to meet requirements in terms of turnover, share capital and other factors. Companies wishing to register also need to complete a memorandum of association, articles of association and forms ten and twelve.
Examples of public limited companies include Marks and Spencer, The Beecham Group and Scottish Power to name a few. There are thousands of public limited companies, all identifiable by the initials PLC.
There are many small companies based in Britain which wish to trade stock publicly and reap the related benefits. AIM not only allows its members to do this on a smaller scale than the London Stock Exchange but also brings exposure to these companies so that possible investors or collaborators can become aware of them.Investors
When it comes to investments the British public is swamped with opportunities to accumulate wealth through a variety of investment plans. These multitudes of opportunities have significant advantages and restraints that attract and turn away different crowds of investors.
The advantage of AIM for the investor comes in the form of tax breaks. AIM investments are classed as quoted investments. However, when income received from them is declared on the tax return it is classified as unquoted investments.
As unquoted investments are not listed they represent more of a risk to the investor. To address this factor the HMRC offer tax breaks on this kind of investment. This works by the investor receiving a 5% taper relief on gains made. This means that a higher rate tax payer who would normally have a capital gains tax liability of 40% now has it reduced to 35%. For some individuals the seemingly meagre 5% can equal to a large saving which is a lucrative position many have taken advantage of.