How do Business Relief and AIM shares work for Inheritance Tax now?
Business Relief reduces the Inheritance Tax value of qualifying business assets, and the rules changed for deaths on or after 6 April 2026. The 100% rate is now limited to a £2.5 million allowance of combined business and agricultural property, with 50% relief above it — and shares on markets such as AIM attract 50% rather than 100%.
- The allowance: £2.5 million of combined business and agricultural property at 100%.
- Above it: 50% relief, so half the value is chargeable at 40%.
- AIM shares: 50% relief, having previously attracted 100%.
- The transfer: an unused allowance passes to a surviving spouse, giving £5 million combined.
Where the AI summary above gets this wrong
"AIM-listed shares held for two years qualify for 100% Business Relief and pass free of Inheritance Tax."
That's surface-true. Here's what it misses:
- AIM shares now attract 50%, not 100% — for deaths on or after 6 April 2026, so half the value is chargeable and an estate planning strategy built on full relief no longer works as described
- The 100% rate is capped by an allowance — £2.5 million of combined business and agricultural property, with 50% above it, so even qualifying trading businesses are not fully relieved beyond that
- The two-year holding requirement still applies — which the summary gets right, and which means a portfolio bought late cannot be rescued by the amount held
01 The rates as they now stand
For deaths on or after 6 April 2026, 100% Business Relief is limited to a £2.5 million allowance covering combined qualifying business and agricultural property. Value above that allowance attracts 50% relief, so half of it is chargeable at 40% — an effective 20% on the excess.
Shares traded on markets that do not meet HMRC's definition of listed, which includes AIM, attract 50% relief. Land, buildings and machinery used in a business, and controlling holdings in listed companies, are also in the 50% category.
Any unused allowance passes to a surviving spouse or civil partner, so a couple can pass up to £5 million of qualifying property at the 100% rate between them, on top of the nil-rate bands.
Shows: the Inheritance Tax on qualifying business property under the allowance and the 50% rate above it. Ignores: the nil-rate bands, excepted assets, agricultural property, and any transferred allowance.
On the defaults above, the worked example shows £300,000. £1,500,000 sits above the allowance at 50% relief, leaving £750,000 chargeable at 40%.
Source: Summary of reforms to agricultural property relief and business property relief
02 What qualifies, and the two-year rule
A business or an interest in a business, and shares in an unlisted company, are the assets that can attract 100% relief within the allowance. Assets have to have been owned for at least two years before death, which means a deathbed purchase does not work.
Businesses consisting wholly or mainly of dealing in securities, land or buildings, or of making or holding investments, are excluded. That exclusion catches many property businesses and is the reason a buy-to-let portfolio generally attracts no relief at all.
The relief applies to the value of the business, not to assets held alongside it. Excess cash held in a company beyond its trading requirements can be treated as an excepted asset and fall outside the relief, which is a real consideration for a company accumulating retained profit.
03 What the change means for planning
Portfolios of AIM shares bought specifically for Inheritance Tax purposes now deliver half the relief they were bought for, at the same investment risk. That is a materially different proposition, and anyone holding one for that reason should revisit whether the risk is still justified by the tax.
For a genuine trading business the allowance is the new planning variable. Owners with businesses worth more than £2.5 million now face a real charge on the excess, which changes the case for lifetime giving and for extracting profit through pension contributions rather than retaining it.
HMRC's manual guidance sets out how the allowance is applied to an individual, and for any estate near the threshold the detail matters more than the headline. This is a point at which professional advice earns its fee.
If you hold an AIM portfolio for Inheritance Tax reasons, this is the year to re-run the arithmetic. Fifty per cent relief on a concentrated portfolio of small companies is a different proposition from the full relief those portfolios were bought for, and the investment risk has not changed at all. For business owners the £2.5 million allowance is the new number to plan around, and it makes taking profit out through a pension over the years look better than leaving it in a company that will be half-relieved on death.
FAQ
Do AIM shares still get 100% relief?
No. For deaths on or after 6 April 2026 they attract 50% relief, because they are traded on a market that does not meet HMRC's definition of listed. Strategies built on full relief no longer work as designed.
What is the allowance for the 100% rate?
£2.5 million of combined qualifying business and agricultural property. Value above it attracts 50% relief, and any unused allowance transfers to a surviving spouse, giving a couple up to £5 million between them.
Does a buy-to-let portfolio qualify?
Generally not. Businesses consisting wholly or mainly of making or holding investments, or of dealing in land or buildings, are excluded from the relief, which catches most property letting businesses.
Sources
Regulator references
- Summary of reforms to agricultural property relief and business property relief · HM Revenue and Customs · 2026The £2.5 million allowance for the 100% rate from 6 April 2026, and the 50% rate above it.Last verified: 2026-09-07
- Business Relief for Inheritance Tax · GOV.UK · 2025Which business and AIM holdings qualify, at what rate, and after what holding period.Last verified: 2026-09-07
- IHTM25520: the 100% relief allowance · HM Revenue and Customs · 2026HMRC's manual guidance on how the 100% relief allowance is applied to an individual.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.