AIM shares still qualify for business relief against inheritance tax, but from 6 April 2026 the relief fell from 100% to a flat 50%, an effective inheritance tax charge of up to 20% on the whole holding. AIM shares also sit outside the £2,500,000 business relief cap, in their own 50% category (gov.uk, as at August 2026, subject to change).
Many guides still call AIM shares inheritance-tax-free, which is out of date for a death on or after 6 April 2026. The figures below apply to England and Wales as at August 2026 and are subject to change.
Do AIM shares still qualify for business relief?
Yes. Qualifying AIM shares still attract business relief (also called business property relief, or BPR), the inheritance tax relief for trading businesses and their shares. What changed is the rate: from 6 April 2026, relief on AIM and other shares not listed on a recognised stock exchange fell from 100% to a flat 50%. AIM counts as an unlisted market for these rules, so most qualifying AIM holdings are caught.
Business relief reduces the taxable value of qualifying assets, so less of the estate meets the 40% rate. A qualifying AIM portfolio held two years once often passed with nothing to pay; it now passes with half its value taxable. Our guide to business relief after the 2026 reform covers the wider package.
How much inheritance tax do AIM shares pay from 6 April 2026?
Qualifying AIM shares get 50% business relief from 6 April 2026, so half the value stays in the taxable estate and is charged at 40%, an effective inheritance tax rate of up to 20% on the whole holding. Unlike an unquoted trading company, AIM shares do not use any of the £2,500,000 relief allowance, and the 50% rate applies however large the holding (gov.uk, as at August 2026, subject to change).
| Feature | Before 6 April 2026 | From 6 April 2026 |
|---|---|---|
| Relief on qualifying AIM shares | Often 100% | Flat 50% |
| Effective inheritance tax rate | Usually 0% | Up to 20% on the holding |
| Uses the £2,500,000 relief cap | Not applicable | No, a separate 50% category |
| Minimum holding period | Two years | Two years, unchanged |
Source: gov.uk, reforms to APR and BPR, read with the December 2025 confirmation of the £2,500,000 allowance per person. As at August 2026, subject to change.
A worked example on a £200,000 qualifying AIM portfolio held over two years at death (figures illustrative and rounded):
- Start with the holding. A qualifying AIM portfolio is worth £200,000 at the date of death, held for over two years.
- Apply 50% business relief. Relief covers £100,000, leaving £100,000 in the taxable estate.
- Apply the 40% rate. Inheritance tax on the remaining £100,000 is £40,000, assuming the nil-rate bands are used elsewhere.
- Read the effective rate. £40,000 of tax on a £200,000 holding is an effective rate of 20%, where before 6 April 2026 the same portfolio would often have passed with nothing to pay.
Tax on the shares can often be paid in ten equal yearly instalments, interest-free on qualifying business assets, which eases pressure to sell in a weak market.
Which AIM shares qualify, and how long must you hold them?
Not every AIM share qualifies. The company must be trading rather than mainly holding investments, and you must hold the shares for the right period and still hold them at death. HMRC tests each holding on the facts, so a portfolio marketed as inheritance-tax-efficient is not a guarantee (gov.uk, as at August 2026, subject to change).
- The company must qualify. It has to be a trading business, not one that mainly deals in shares, land or other investments, and it must still qualify at the date of death.
- You must hold the shares for two years. The shares have to be owned for at least two years before death to attract any relief.
- You must still hold them at death. Relief applies to shares held at the date of death, so selling out, even briefly, can reset the two-year clock.
- The market matters. AIM is treated as unlisted here, which is why qualifying AIM shares fall into the 50% band rather than the capped 100% band.
AIM shares are commonly held inside a stocks and shares ISA. The wrapper shelters them from income tax and capital gains tax, but it does not remove them from the estate: the same 50% relief and two-year rule apply on death. Our guide to whether ISAs count for inheritance tax covers this in more detail.
How do AIM shares compare with other business relief assets?
AIM shares now sit in their own 50% relief band, separate from unquoted trading companies and from making a lifetime gift. Each route carries a different relief, timescale and set of risks, so the right choice depends on the estate.
| Route | Relief from 6 April 2026 | Timescale to work | Main trade-off |
|---|---|---|---|
| Qualifying AIM shares | Flat 50%, outside the £2.5m cap | Two years, held to death | AIM company risk and volatility |
| Unquoted trading company | 100% up to £2,500,000, then 50% | Two years, held to death | Value above the cap is taxed |
| Outright lifetime gift | Full value leaves the estate | Seven years to be exempt | You give up ownership and control |
Sources: gov.uk business relief and gov.uk gifts. The seven-year rule uses taper relief on the tax, and the annual gift exemption is £3,000. As at August 2026, subject to change.
AIM shares keep a feature gifts and trusts often lack: you keep ownership, income and control while alive. The cost is now an effective charge of up to 20% on death, where before it was usually nothing, so weighing the two is part of wider inheritance tax planning strategies.
What do people get wrong about AIM shares and inheritance tax?
Two misreadings come up most often: that qualifying AIM shares are still inheritance-tax-free, and that they use up the £2,500,000 business relief allowance. Neither holds from 6 April 2026. AIM now carries a flat 50% relief, an effective charge of up to 20% that holding longer does not remove, and it sits in its own category outside the £2,500,000 cap rather than drawing on it.
Any page or brochure still calling AIM inheritance-tax-free is using pre-2026 framing. The £2,500,000 allowance is reserved for assets eligible for up to 100% relief, such as an unquoted trading company, so AIM cannot be stacked against the cap for full relief. To value a holding, see our guide to valuing a share portfolio for probate.
Frequently asked questions
Do AIM shares still qualify for business relief?
Yes, but from 6 April 2026 the rate falls from 100% to a flat 50%, an effective inheritance tax charge of up to 20% on the holding. The two-year holding rule and the trading-company test are unchanged (gov.uk, as at August 2026, subject to change).
How long must you hold AIM shares to avoid inheritance tax?
At least two years, and you must still hold them at the date of death. Selling out, even briefly, can reset the two-year clock. From 6 April 2026 the relief is 50%, so holding for two years reduces the charge rather than removing it.
How much inheritance tax do AIM shares pay from April 2026?
Qualifying AIM shares get 50% relief, so half the value is charged at 40%, an effective rate of up to 20%. On a £200,000 portfolio held over two years, that is roughly £40,000 where the nil-rate bands are used elsewhere. Before 6 April 2026 the same holding often passed with nothing to pay.
Are AIM shares in an ISA free from inheritance tax?
No. An ISA shelters AIM shares from income tax and capital gains tax, but it is still part of your estate. Qualifying AIM shares in an ISA get the same 50% relief and two-year rule from 6 April 2026, so an effective charge of up to 20% can apply on death.
Do AIM shares use up the £2.5 million business relief allowance?
No. AIM shares sit in a separate 50% relief category and do not use any of the £2,500,000 that can pass at 100% relief. That allowance is reserved for assets still eligible for up to 100% relief, such as an unquoted trading company. The 50% rate applies however large the holding is.