(Bloomberg) -- A £75 billion ($91 billion) stock market for emerging UK companies risks losing some of its appeal for investors should the government alter or scrap inheritance tax.

The Times reported on Sept. 23 that Prime Minister Rishi Sunak is planning big cuts to the levy, a move that would deal a blow to the AIM market for small- and medium-sized growth stocks, according to Nick Hyett of Wealth Club, a firm specializing in tax-efficient investing.

Hyett estimates that as much as 10% of the junior UK market stems from the fiscal benefits attached to owning shares in the firms that make it up. 

Many AIM shares are exempt from the levy as long as the buyer has held them for two years or more. The market includes firms such as tonic water-maker Fevertree Drinks Plc and legal financier Burford Capital Ltd.

While losing the tax perk would be something investors would have to take into account, it would be “stretching it” to say it would be “a catastrophe for AIM,” said Hyett, an investment manager at Wealth Club.

Company Founders

That’s because the bulk of the shares on AIM are held by founders of companies or other investors seeking the bumper returns that can come from owning shares in companies at an early stage of their development.

Read: UK’s Top 1% Would Gain Most From Inheritance Tax Cut, IFS Says

The FTSE AIM All Share Index, which tracks 693 stocks, had a market capitalization of £74.8 billion as of Tuesday’s close.

A spokesperson for AIM parent London Stock Exchange Group Plc declined to comment.

It’s not easy to identify which AIM stocks benefit from the exemption as there’s no set list of rules, said Russ Mould, investment director at AJ Bell Plc.

“Under those circumstances it is unlikely that IHT planning was major driver for investment even in the qualifying quoted companies on London’s junior platform,” he said. “That said, it could have influenced some purchases.”

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