While the fiscal arithmetic and measures to boost the housing market have prompted concerns, the UK government’s cuts to share-trading taxes in parts of the stock market and wider tax reliefs for small-company investments have been welcomed by the wealth management sector.

This week Chancellor of the Exchequer, or finance minister, George Osborne set out his annual budget statement, including, as expected, a cut in the top income tax rate to 45 per cent from 50 per cent, as well as continued pressure against “aggressive” tax avoidance and evasion. (To view a report on the budget, click here.)

Osborne has removed stamp duty from share trading on the Alternative Investment Market and ISDX, in a move designed, it is hoped, to boost liquidity and the capital-raising in the smaller company sector after what has been a tough period for this segment of the equity market.

An additional 0.5 per cent will be cut from share purchases as a result (source: TD Direct Investing). Meanwhile, capital gains tax relief has been extended for “Seed Enterprise Investment Schemes (SEIS) to the 2014/15 financial year. Already, from 6 April, reliefs on Enterprise Investment Schemes will increase to £2 million.

“It is often said that SMEs are the lifeblood of the British economy. With 1,100 companies, AIM is home to three times as many companies as the FTSE 350. Many of these are developing the technologies and products of the future and looking for growth capital through AIM. The announcement by the Chancellor acknowledges their contribution to the UK and will, we hope, encourage more investors to consider an investment into this vibrant market,” Oliver Bedford, co-manager of Hargreave Hale AIM VCTs, said.

Paul Jourdan, chief executive of Amati Global Investors, managers of Amati VCTs said: “We see the abolition of stamp duty on AIM as excellent news for growth companies and entrepreneurs in the UK.”

“More important than the reduction of frictional costs and possible re-rating of some of the more neglected parts of the market, we think this move will be an important step in consolidating AIM's position as the world's leading junior stock market for companies with a value of between £15 million and £200 million, as competitor markets do not have stamp duty,” he said.

Matthew Woodbridge, Wealth Advisory, Barclays Wealth and Investment Management, pointed out that overall, there has been no change in the budget to the tax treatment of EIS or Venture Capital Trusts, as a number of adjustments have already been made in a positive direction.

“Announced in the budget was an extension of the capital gains relief for Seed EIS (SEIS) to the 2014/15 tax year which should increase the popularity of this scheme, and it is hoped encourage more individuals to become entrepreneurs with the support of SEIS investors. Capital gains that arise in the 2013/14 tax year can be relieved by investing in an SEIS in the 2013/14 or 2014/15 tax year. However, the rate of relief will be 50 per cent of the gain and not 100 per cent as before,” he said.

“There was also a brief mention of VCT Enhanced Buybacks, where investors can opt to sell their shares if they have held them for the required period, reinvest for another five years and receive 30 per cent income tax relief,” he said.

“It may appear that the government is concerned that this is not in the spirit of the legislation and will, 'monitor particular aspects of the venture capital schemes to ensure that they remain well-focused and supportive of businesses needs'. Although you could argue that an investor committing their capital to funding small and medium-sized enterprises for another five years is a positive action, it appears the government may not be entirely convinced and we are likely to see further developments here,” Woodbridge added.

Ralph Cox, manager of BlackRock UK Smaller Companies fund, said: "AIM is a world-class public market particularly suited for fostering smaller companies and today many of the UK’s most exciting smaller growth companies are indeed listed on AIM.  The government’s decision to abolish stamp duty for AIM companies should have the positive twin effects of increasing investor appetite for these shares and helping attract and direct investment capital into UK small businesses and therefore the broader UK economy.”