Over 100 major London-listed companies, including Fevertree Drinks and YouGov, have written to the Chancellor warning that the uncertainty surrounding the future of a key tax relief tied to London’s junior stock market is battering investor confidence.

The letter, reported by Sky News, said that reports suggesting the government could end the inheritance tax relief on AIM stocks “has significantly impacted the ability of AIM businesses to raise capital”.

“A lack of clarity on the future of this relief has damaged investor confidence, showing clearly the close link between the relief and the future success of the market,” the letter added.

Signatories to the letter, which was sent last month, include Fevertree Drinks, YouGov, Arbuthnot Banking Group, Jet2, M&C Saatchi, Revolution Bars and Revolution Beauty.

Sky News reported that the letter was organised by Octopus Investments, which has invested in a large portfolio of AIM stocks through its AIM Inheritance Tax Service, while investment bank Cavendish is understood to have helped gather more signatories.

The letter said that Chancellor Rachel Reeves should use her upcoming Budget on 30 October to reaffirm her support for the tax relief.

“Clear government support for [the tax relief] will restore confidence in the AIM market and help it to play a key role in driving economic growth, ensuring the UK remains competitive for high-potential businesses,” it said.

The Treasury was contacted for comment but it has often not directly commented on the speculation surrounding the tax relief.

When asked about the issue in the past, a Treasury spokesperson told City AM: “The Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and any decisions on how to do that will be taken at the Budget in the round.”

The Institute for Fiscal Studies said today that taxes may have to go up by as much as £25bn in the Budget if Reeves wants to improve the delivery of public services.

The letter comes on top of a host of other warnings stating that scrapping the relief could do untold damage to the junior exchange.

City AM reported today that one top investment bank has urged all of its AIM-listed clients to prepare “proactive measures” ahead of the Budget to cushion themselves from any turmoil sparked by the Chancellor Rachel Reeves’ rumoured plans.

Cavendish and Octopus were contacted for comment.