City broker calls for widened IHT relief to ‘boost UK stock investment’

The head of a prominent brokerage firm in the City has urged the government to broaden inheritance tax relief to encompass more stocks listed in London, aiming to stimulate investment in the UK.

Julian Morse, co-CEO of Cavendish Financial, contends that such a move would particularly benefit smaller companies, which play a crucial role in job creation. Currently, only shares in firms listed on the Alternative Investment Market (AIM) qualify for inheritance tax relief.

Morse, along with other financial figures, suggests expanding this relief to include companies on the main market of the stock exchange up to a specified market value, rather than entirely scrapping it. He emphasises the importance of maintaining relief for AIM and unquoted stocks to prevent adverse effects on job creation and GDP.

Another industry leader supports extending inheritance tax relief to the main market, asserting that it would significantly boost investment in UK stocks, which have faced challenges in recent years. Concerns are raised about low valuations making these stocks susceptible to overseas acquisitions and private equity takeovers.

Experts propose that the current tax system encourages investments in other assets, like residential property, over main market shares, and they advocate for measures to rectify this bias against equities.

Charles Hall, head of research at Peel Hunt, said that extending inheritance tax relief would be a “very realistic” approach that could relieve takeover pressure on small and mid-cap companies. He added:

“It would help revitalise the ecosystem and provide additional demand turbocharging the market. These are not difficult or expensive changes. It wouldn’t require massive Government largesse.”

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