Pillar Guide · Updated July 2026
AIM Shares & Inheritance Tax Business Relief: 2026/27 Guide
Business Relief can shelter qualifying AIM-listed shares from Inheritance Tax after just two years, but the relief was cut from 100% to 50% from April 2026. This guide explains how it works, what changed, and the risks involved.
What Business Relief Is
Business Relief (BR), previously known as Business Property Relief, reduces the value of qualifying business assets when calculating Inheritance Tax on an estate. It was designed so that family businesses and farms would not need to be sold simply to pay an Inheritance Tax bill on the death of an owner. Over time, BR has also become widely used by investors to hold shares in qualifying trading companies specifically to reduce future Inheritance Tax.
Why AIM Shares Qualify
For Business Relief purposes, shares are broadly treated as either "quoted" (listed on a recognised stock exchange's main market) or "unquoted". AIM, despite being a public market where shares are bought and sold daily, is not classed as a recognised stock exchange's main market for this purpose, so many AIM-listed trading companies count as unquoted and can potentially qualify for Business Relief, provided the underlying business passes the qualifying trade test.
The Two-Year Holding Rule
To qualify, you generally need to have owned the qualifying shares for at least two years immediately before death, and you must still hold qualifying shares (or assets that replace them, under the replacement property rules) at the date of death. This two-year period is far shorter than the seven years required for an outright lifetime gift to fall out of your estate entirely, which is a key reason AIM portfolios are used in Inheritance Tax planning.
The April 2026 Change
Following the Autumn Budget 2024, the government announced that from 6 April 2026, shares not listed on a recognised stock exchange's main market — including AIM shares — qualify for only 50% Business Relief rather than 100%. In practice, this means the qualifying value of an AIM share holding is now taxed at an effective rate of 20% (half of the standard 40% Inheritance Tax rate) rather than being entirely free of Inheritance Tax, as was previously the case. This sits alongside a separate reform capping 100% relief on other qualifying business and agricultural property at a combined £1 million allowance, with 50% relief above that threshold.
Risks of AIM IHT Portfolios
- AIM-listed companies are typically smaller and more volatile than main market shares, and some have failed entirely
- Liquidity can be limited, meaning shares may be harder to sell quickly at a fair price, particularly in market downturns
- Eligibility for Business Relief depends on each company continuing to meet the qualifying trade test, which can change over time
- Tax relief does not offset investment losses — a company can still lose value even if its shares qualify for relief
AIM Relief vs Gifting
An outright gift becomes a potentially exempt transfer, which only falls fully outside your estate if you survive seven years, and you permanently give up access to the gifted asset. A qualifying AIM Business Relief investment can become free of Inheritance Tax on the qualifying portion after only two years, while you retain ownership, income and access to the underlying investment (subject to investment risk and the current 50% relief level). Many people use both strategies together as part of a wider estate plan.