Investors will be able to invest in company shares trading on a recognised stock exchange within the European Economic Area, including AIM.
It is hoped the move will be a way to provide funding for smaller companies.
Junior Isas and Child Trust Funds will also be eligible to invest in these shares.
The move was originally mentioned by Chancellor George Osborne in March's Budget. He said: "Long-term economic success depends on today's small and high-growth companies being able to access affordable long term financing to grow into the large businesses of tomorrow."
He also said that the Government would abolish stamp tax on shares for companies listed on growth markets such as AIM from April 2014.
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Tony Vine-Lott, director general of the Tax Incentivised Savings Association, said investors would be helping businesses as well as benefiting for tax advantages.
He said: "Britain is notoriously poor at providing capital funding to potentially rapid growth start-up companies. Now, investors will have the opportunity to back these UK growth companies and at the same time benefit from the tax advantages of doing so within an Isa wrapper.
"Many of these companies are micro employers with a handful of staff who will in the future have far greater opportunities to invest in the business as well. This is good news for investor choice and for the economy and job creation."
 
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