PMK

Investors in shares quoted on PLUS Markets’ (PMK:AIM) junior bourse are being reassured that its preferential tax treatment will remain after last week’s granting of Recognised Investment Exchange (RIE) status by the Financial Services Authority (FSA) had created some confusion.

News of the RIE status prompted a flurry of bulletin board postings querying whether the new status invalidated the classification of shares quoted on the junior ‘PLUS-quoted’ exchange as ‘business assets’. But Simon Brickles, PLUS Markets chief executive, says: ‘People think that if you’re on an RIE, you lose the tax benefits, but you don’t.’

Under HM Revenue & Customs (HMRC) rules, only ‘unquoted’ shares qualify as business assets, which attracts enhanced taper relief on capital gains tax reducing the 40% tax to 10% after two years.

The confusion seems to have originated from investors, perhaps understandably, mixing up the term ‘Recognised Stock Exchange’ with RIE status. Shares quoted on a Recognised Stock Exchange don’t qualify as business assets but this is purely an HMRC classification and nothing to do with the FSA granting PLUS Markets RIE status.

What the RIE status does mean is that PLUS Markets will be able to launch a second exchange (to be called PLUS-listed) to compete with the London Stock Exchange’s (LSE) official list. This means companies approved for a listing by the FSA can then have their shares admitted to trading on a market run by PLUS as opposed to only the LSE.

PLUS-listed will sit alongside PLUS-quoted as does the Aim to the official list. Both exchanges can co-exist under the same exchange group without affecting the tax status of the other. PLUS-listed, which is due to launch next month, will be classed as a recognised stock exchange, so shares on it won’t qualify as business assets.