AIM ISA

Take Jet2, for example; quoted on the Alternative Investment Market (AIM), it has been a popular choice for investors seeking exposure to smaller growth companies. When held within an ISA, certain types of AIM shares can offer benefits, particularly around inheritance tax planning.

If you’re considering AIM investments, our Stocks and shares ISA provides a straightforward way to hold these shares whilst protecting your gains from UK tax.

What are AIM shares?

AIM shares are stocks quoted on London’s Alternative Investment Market, which sits alongside the Main Market on the London Stock Exchange. These are typically smaller, younger companies that don’t meet the stricter requirements of the Main Market. You’ll find everything from tech startups to established mid-sized businesses.

The key thing to understand about AIM shares is that they come with different characteristics than FTSE-listed stocks. They’re generally more volatile and less liquid, which means you might not be able to sell them quickly or at the price you want. Many household names started on AIM before graduating to the Main Market.

What is the Alternative Investment Market (AIM)?

The Alternative Investment Market launched in 1995 as a way for smaller companies to raise capital without the hefty regulatory requirements of a full stock exchange listing. It’s become one of the world’s best known growth markets, with over 600 companies currently listed.

Think of the AIM share market as a stepping stone. Companies get access to public funding and the prestige of being on a stock market, whilst investors get earlier access to potentially high-growth businesses. The trade-off is less stringent reporting requirements and typically higher risk.

How does the AIM market work?

Unlike the Main Market, every AIM company must have a nominated adviser (or “Nomad”) who vouches for them. This adviser ensures the company meets AIM’s rules and provides ongoing guidance. It’s a lighter-touch regulatory approach that keeps costs down for smaller firms. Trading works much like any other UK market. You can buy and sell during market hours through your broker, though you might notice wider spreads and lower trading volumes compared to blue-chip stocks such as those in the FTSE 100 index.

What is an AIM ISA?

An AIM ISA isn’t technically a separate product – it’s simply a regular ISA that holds AIM shares. The term has caught on because these shares offer benefits when held in an ISA, particularly around inheritance tax for certain AIM stocks. Any gains and dividends from your AIM shares grow tax-free within the ISA, just like any other investment.

From 6 April 2026, qualifying AIM shares will receive 50% Business Relief (previously called Business Property Relief) for Inheritance Tax. This makes an AIM ISA attractive for estate planning, which we’ll explore further below.

Should you hold AIM shares in an ISA?

Holding AIM shares outside an ISA means you’ll pay capital gains tax on any profits, and you’ll owe tax on dividends too. For active traders or those with sizeable holdings, these costs add up quickly.

That said, certain AIM shares qualify for Business Relief for inheritance tax purposes, whether they’re in an ISA or not. The ISA provides additional protection from income and capital gains tax during your lifetime.

If you’re investing serious money into AIM investments for inheritance tax planning, it’s worth speaking to a financial adviser about the best structure for your circumstances.

Benefits of AIM shares in your ISA

Tax-free income and growth

Every dividend and capital gain within your ISA is completely tax-free. This is particularly valuable with AIM shares, which can be volatile – you might trade more frequently to manage risk, and those extra trades won’t trigger capital gains tax. You keep every penny of growth.

Qualifying AIM shares held for at least two years can qualify for 100% Business Relief, making them useful for inheritance tax purposes. This applies whether they’re in an ISA or a standard Dealing account, which is unusual – most ISA assets form part of your taxable estate. However, it’s important to note that from 6 April 2026, the 100% relief on inheritance tax will drop to 50% on qualifying AIM shares.

Access

Unlike pensions, you can access money in your ISA whenever you need it, unless held in a Lifetime ISA where there are withdrawal restrictions. If you’ve invested in AIM shares for inheritance tax purposes but suddenly need the capital, you can usually sell up and withdraw funds within days, but there can be some exceptions.

AIM investment risks

Let’s be clear: AIM shares are riskier than your typical FTSE 100 stocks. These companies are smaller, often unprofitable, and can be illiquid. Share prices can swing wildly on news or low trading volumes. Some AIM companies fail completely.

There’s also the Business Relief risk. The rules can change – as mentioned, the government has already announced reforms to AIM shares inheritance tax treatment coming in April 2026. A company might also lose its qualifying status if it changes its business model. And remember, you need to hold for two years to get the relief in the first place. Diversification is important if you’re building an AIM portfolio.

How to invest in AIM shares with AJ Bell

Getting started is straightforward. You can explore AIM shares and see how they perform on the FTSE AIM All-Share Index.

When you’re ready to buy AIM shares, select the specific share you want, enter the amount you want to invest, and place your order. Our platform shows you real-time prices and lets you set limit orders if you want to buy at a specific price.

You can hold AIM shares alongside your other investments, and everything sits under your ISA’s tax wrapper, just keep an eye on your annual ISA allowance.

AIM ISA FAQs