Business Relief and the General Election

whitman insights election

Ahead of the UK General Election there has been speculation regarding a potential change to Business Relief. Following a review of both the Conservative and Labour Party manifestos this does not appear to be on the agenda, reflecting the important role that Business Relief plays in supporting the UK economy.

Whilst we cannot guarantee that there will be no future change regarding Business Relief, both political parties are keen to create an environment to promote growth. The Conservative party explicitly stated they will “retain key tax incentives that encourage small businesses to grow, including Business Relief” and Labour highlighted “Financial Services as one of Britain’s greatest success stories” together with a desire to “increase investment in UK markets”. This is important as it has become increasingly evident that UK listed companies (both on the Main Market and AIM) require more, rather than less financial support. According to Calastone[1], UK equities suffered £1.11 billion of outflows in May ’24, the second highest figure on record, with 36 consecutive months of negative flows.

After one of the shortest recessions on record, UK GDP re-bounded by 0.6% in Q1 ’24.  The UK economy appears to be finally gaining momentum after years of slow growth and investors seem to have woken up to the value in the unloved UK stock market. A resilient economy, falling inflation and future cuts in interest rates should provide a favourable background for AIM with sentiment buoyed by the level of takeovers. According to FE Analytics[2], UK Smaller Companies is the best performing sector in the 5 months to 31 May ’24, ahead of the Technology and North American sectors, which have been buoyed by the continued strength of the Magnificent Seven stocks.

Over recent months Whitman has written a series of topical articles, including why now is a good time to invest in AIM and Business Relief tax planning strategies. These articles together with literature from our Private Client Team can be found here.

[1] www.calastone.com/insights/after-a-red-hot-start-to-2024-fund-inflows-cooled-dramatically-in-may/

[2] www.trustnet.com/news/13416178/uk-smaller-companies-funds-leapfrog-to-top-of-2024-performance-tables/

Disclaimer: This communication is issued and approved by Whitman Asset Management Limited (“Whitman”) which is authorised and regulated by the Financial Conduct Authority.  The value of investments may fall as well as rise and your capital is at risk. Information on past performance, where given, is not necessarily a guide to future performance. We strongly recommend that you seek professional advice before you consider making investments in such securities. AIM has less stringent rules and AIM company shares may be less liquid than those companies listed on the London Stock Exchange.

Although Whitman uses all reasonable skill and care in compiling this report, no warranty is given as to its accuracy or completeness. The opinions expressed accurately reflect the views of Whitman at the date of this document based on our views at such time regarding market conditions and other factors, may depend upon assumptions or projections that may not prove to be correct, and are subject to change. The opinions stated are honestly held, they are not guarantees and should not be relied upon.

Current tax rules and the available tax reliefs offered on investments into AIM-quoted stocks may change at any time, and there is a considerable risk that if the legislation changed in respect of these tax reliefs, then those stocks that no longer qualified for such reliefs would be subject to heavy selling pressure, potentially leading to significant investment losses.

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