Experts warn on putting AIM shares in ISAs

Investors are being warned to tread carefully if the green light is given by the Government to place shares in AIM-listed companies inside an individual savings account (ISA).

In last week's Autumn Statement, the Chancellor announced a consultation on changing ISA investment rules to allow investors to place AIM shares – in some of Britain's smaller, up-and coming companies – to be placed within an ISA. This would mean any profit made on AIM shares would be free from capital-gains tax.

However, while welcoming the extra choice, financial advisers have said AIM investment is high risk and should be approached with caution.

"Allowing investors access to 1,100 AIM stocks in ISAs provides welcome additional choice and opportunity to invest tax efficiently in smaller companies," said Danny Cox, the head of advice at Hargreaves Lansdown. "It is important to note these tend to be a higher risk than blue-chip stocks so won't suit everybody."

More generally, the Autumn Statement brought a boost to savers by increasing the amount that can be invested each year in an ISA by 2.1 per from next April. But, this is still below the current rate of inflation.