Whether to investing in AIM listed company?

Wobblydeb

There is a company I would like to invest in, but it is AIM listed so not available for my S&S ISA.

I don't currently make a tax return (salaried individual with all savings in ISAs) and am not keen to start.

Should I listen to my head and just not bother with a stock purchase outside of the ISA wrapper, or plunge in and enjoy the ride? The purchase has two purposes a) a personal interest in the company and b) I think it potentially has a good future so hope to make something from the investment.

NB - Yes I understand the risks of AIM listings and am okay with that. Already lost 30% each on two smallcaps...

tradetime

Not really sure what you question is, you seem to understand the risk of AIM listed stocks, so there is little point in people queuing up to tell you "Yes you should." or "No you shouldn't." based on risk. Other than that, I don't see that it is a decision anyone else can make for you. I certainly wouldn't try, suppose I argued a great case against buying it, and it turned into the next MSFT! Doh!!

purch

I don't think the possibility that you might incur a taxable charge on the Investment is a good argument not to make the Investment.

tradetime

purch wrote: »

I don't think the possibility that you might incur a taxable charge on the Investment is a good argument not to make the Investment.

Certainly not, that would be a crazy point of view.

cheerfulcat

Some AIM listed stocks are allowed in ISAs, namely those which are listed on a recognised stock exchange elsewhere. Might be worth checking.

Wobblydeb

purch wrote: »

I don't think the possibility that you might incur a taxable charge on the Investment is a good argument not to make the Investment.

That's a good point well made. I think I've got to be certain that there is enough potential for the hassle of completing tax returns. If I put in £700 and after costs make £100 (which would be a good return) is the £100 worth my time spent doing the tax return.

That is of course assuming the shares increase in value ... LOL

tradetime

Wobblydeb wrote: »

That's a good point well made. I think I've got to be certain that there is enough potential for the hassle of completing tax returns. If I put in £700 and after costs make £100 (which would be a good return) is the £100 worth my time spent doing the tax return.

That is of course assuming the shares increase in value ... LOL

I'm not sure why you would be doing a tax return for £100 unless there is a lot missing from your posts so far, like about £10k profit from something else.

Reasons to file a tax return, for most everyday people when not using your S&S ISA.
Your gains, realized in a tax year exceed the Capital gains allowance currently £10,100 or
Your turnover exceeds 4 times said CG allowance currently = £40,400.

turbobob

Yes my understanding is that you would not have to do a tax return by default. CGT is only payable on gains above the allowance (£10,100 in 09-10 tax year). More info here http://www.hmrc.gov.uk/cgt/shares/basics.htm

Wobblydeb

Ahhhhhh ... okay.

I have made tax returns in the past for investment property, but never for investment income. The investment property had to be submitted even when it was loss making.

So no tax return necessary if under the CGT limit - what about dividend income? (Promise to check this all out myself!)

Cheers all,

tradetime

Wobblydeb wrote: »

Ahhhhhh ... okay.

I have made tax returns in the past for investment property, but never for investment income. The investment property had to be submitted even when it was loss making.

So no tax return necessary if under the CGT limit - what about dividend income? (Promise to check this all out myself!)

Cheers all,

I suspect the value of the investment property being sold was above 4 x CG allowance currently 4 x £10,100 (let's face it, a garage can be worth that in London, thus the turnover would require declaration.

If you invested say £50,000 in your AIM share and sold it all during the current tax year then your turnover would exceed £40,400 and require a declaration, that's an either / or. If either (for current year) you capital gain is more than £10,100 or your turnover exceeds £40,400 you must file a return.

But do check for yourself, I haven't handled my own tax matters for several years now, so I could be a bit out of touch.