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The poor performance of shares listed on the Alternative Investment Market (Aim) has deterred many inheritance tax (IHT) planners from investing in them, it has claimed.
According to the Financial Times, managed portfolios of Aim shares receive 100 per cent relief from IHT if investors hold them for over two years.
Shares trading on the market are considered to be "unlisted" under the current tax system, enabling investors to shift their assets into Aim IHT portfolios, the newspaper reports.
However, despite these benefits, Martin Churchill, editor of the Tax Efficient Review, reported that inflows into such portfolios reached just £7 million between January and the end of June this year.
This compared with £100 million of investment made during the corresponding period in 2007, the newspaper reports.
Since the start of the year, the FTSE Aim All Share index has fallen by 25 percentage points and there has not been an Aim IHT portfolio that has recorded a positive average return.
Commenting on the situation, Mr Churchill said: "It's a market in the doldrums."
More than 2,900 companies have joined the Aim listings since they were launched in 1995, the London Stock Exchange states.
