AIM shares and inheritance tax: the Business Relief break just halved

For more than two decades, AIM-listed shares have been one of the more aggressive inheritance tax planning routes available to UK investors. Hold them for two years, meet the conditions, and they generally passed free of inheritance tax through Business Relief. From 6 April 2026, that headline 100% relief on AIM shares has been cut in half.

The change is not a closure of the relief, and it does not affect anyone who died holding qualifying shares before the change. But it does materially change the planning maths for anyone holding AIM shares for IHT purposes, or considering buying them for that reason.

What changed on 6 April 2026

Business Relief (sometimes called Business Property Relief or BPR) reduces the value of qualifying business assets for inheritance tax. Two rates apply: 100% relief on certain assets, which passes them to heirs free of IHT, and 50% relief on others.

Until 5 April 2026, qualifying AIM-listed shares attracted 100% Business Relief once held for the required two-year period. From 6 April 2026, AIM-listed shares qualifying for Business Relief receive 50% relief, not 100%. In effect, the IHT charge on those shares moves from 0% to roughly 20% (half of the headline 40% rate).

Shares purchased before 6 April 2026 are not protected from the change. The relief level applies based on the date of death, not the date of acquisition.

The two-year holding rule still applies

Business Relief only becomes available once the shares have been held for two years. Buying AIM shares this week and dying within the year does not trigger any relief at all. That rule is unchanged.

Two narrow exceptions apply: replacement shares (where qualifying assets have been swapped for other qualifying assets) and inheritance from a spouse (where the spouse's holding period can be inherited). Beyond those, the two-year clock starts again with each new holding.

Who is most affected

• Investors holding AIM 'BR portfolios' specifically for inheritance tax efficiency
• Anyone advised in the last few years to move savings or investments into AIM-listed shares with the primary aim of IHT mitigation
• Families with estates above the nil-rate band where AIM shares were intended to fall outside the IHT calculation

If the AIM allocation is a small slice of a wider, diversified portfolio held for its own merits, the change is largely cosmetic. If it is a concentrated position held principally for the tax break, the planning case is now meaningfully weaker.

The wider Business Relief reform

The cut to AIM relief sits alongside a separate change to the rest of Business Relief and Agricultural Property Relief. From 6 April 2026, an individual has a combined £1 million allowance across qualifying business and agricultural assets where 100% relief still applies. Above that allowance, the rate drops to 50%.

AIM shares are treated as a separate category and do not benefit from the £1 million allowance. They simply receive 50% relief from the first pound. Anyone reviewing Business Relief planning during 2026 should be working with both rules in mind, not just the AIM change in isolation.

AIM shares carry real investment risk

This is the part advisers have always had to repeat, and it has not changed. AIM is the junior market: smaller, less-researched companies, lower liquidity and a wider spread of outcomes than the main market. BR portfolios are typically concentrated in a relatively small number of these companies.

Holding AIM shares purely for a tax break has always been a trade-off: a potential IHT saving against investment risk. With the relief halved, the saving side of that trade has shrunk and the risk side has not. That changes the case for some investors and not for others.

What to do

If you have AIM shares held principally for IHT purposes, the change is worth reviewing rather than ignoring. The right response depends on the size of the holding, your overall estate position and what alternatives are available, including gifting, pensions in light of the 2027 pension change, and other reliefs.

Nothing here is a recommendation to buy or sell AIM shares. That decision belongs with a regulated investment adviser who can look at your wider portfolio and tax position together.

Simply Estate is an estate planning firm. Our IHT team can map the new Business Relief rules against your estate alongside the other 2026 and 2027 changes. Visit our inheritance tax planning page to book your free review.