The Alternative Investment Market, London’s small-cap exchange and once a global magnet for early-stage technology and resources companies, is heading into another testing week as the Treasury considers a fresh package of reforms to halt its decline.
According to figures published by the London Stock Exchange Group, the number of companies admitted to AIM has slipped below 600 — its lowest level since the late 1990s and barely a third of the 1,694 firms listed at the market’s 2007 peak. Net delistings continued through the first quarter of 2026, with several mid-cap technology and consumer companies opting for take-private deals or moves to overseas exchanges.
Tax-relief cut still biting
The slide accelerated after the October 2024 Budget, when Chancellor Rachel Reeves halved the rate of Business Property Relief on qualifying AIM shares from 100 per cent to 50 per cent for inheritance-tax purposes. The change, designed to broaden the tax base, has weighed on retail demand. Stockbrokers including Peel Hunt and Cavendish have repeatedly warned that AIM’s traditional appeal — long-term, tax-incentivised retail capital — has eroded faster than the Treasury anticipated.
Julia Hoggett, chief executive of the London Stock Exchange, has spent the past 12 months lobbying for a settled tax framework to stem the outflow. In recent City speeches, Ms Hoggett has argued that a stable, predictable AIM regime is “in the national interest” because the market has historically supplied growth capital to British scale-ups in life sciences, technology and clean energy.
Tech listings choose Wall Street
Compounding AIM’s structural problems is a wider London IPO drought that has accelerated since 2022. Several British technology companies — including software, fintech and chip-design firms — have signalled a preference for New York listings, where higher valuations, deeper analyst coverage and scaled retail interest in tech narratives outweigh the perceived compliance benefits of a domestic listing.
Cambridge-based Arm Holdings, the most-cited example, chose Nasdaq for its 2023 re-listing despite intense Whitehall lobbying. More recently, fintechs Wise and Revolut have either dual-listed or weighed New York for upcoming offerings. Industry data compiled by EY’s quarterly IPO Eye shows that the value of UK IPOs in the opening months of 2026 remained well below pre-pandemic averages, keeping London outside the global top five fundraising venues.
What Treasury reform might look like
Treasury officials are understood to be examining a package that could include a partial reinstatement of inheritance-tax relief on AIM shares, a longer holding-period requirement, and incentives for British pension funds to allocate capital to UK-listed growth equities — building on the Mansion House Compact framework. A formal consultation is expected to follow the next set of public-finance forecasts from the Office for Budget Responsibility.
The City’s lobby groups, including the Quoted Companies Alliance and TheCityUK, have argued that any reform must be paired with measures to deepen institutional demand. Without a domestic buyer base for AIM stocks, they warn, even a tax fix would be a partial answer.
What to watch next
For now, AIM’s near-term direction will be set by a handful of upcoming events: the FCA’s progress report on its 2024 listing-rule reform, the Bank of England’s next Financial Stability Report and its reading on UK equity markets, and any Treasury signalling around the Autumn Budget. With Westminster’s appetite for capital-markets reform clearly rising, the next 12 months may decide whether AIM remains a meaningful funding venue for British technology — or quietly slips into managed decline.
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