Stamp duty on growth markets such as AIM is to be abolished, the Chancellor George Osborne announced in his Budget on Wednesday.

Osborne said the move will directly benefit hundreds of medium-sized UK firms, lowering their cost of capital and supporting jobs and growth across the UK.

The decision comes on the back of complaints that the British tax system has long biased debt financing over equity investment.

In his Budget speech, the Chancellor said: "In places like Edinburgh and London, we have a world beating asset management industry.

"But they are losing business to other places in Europe.

"We act now with a package of measures to reverse this decline - and we will abolish the schedule 19 tax which is only payable by UK domiciled funds."

He also pointed out that while some parts of Europe are are introducing a financial transaction tax, the UK is now getting rid of one.

Responding to the news, Managing Partner at Albion Ventures, Patrick Reeve, said: "AIM is the magnet that attracts smaller companies towards venture capital funding. Yet in recent years AIM has lacked the necessary power to fulfil this role effectively - but the Chancellor's announcement to scrap stamp duty on growth markets such as AIM provides a much needed fillip.

"Abolishing capital gains tax on the sale of companies to employees provides a much needed incentive to unlock hidden talent within UK companies. By securing the government's stamp of approval we expect to see a significant increase in management buy-outs over the coming months as awareness of this route to growth begins to spread.

"This Budget was mindful of the role that growth companies are playing in advancing the UK's progress down the road to recovery."

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