What are AIM shares and how do they reduce inheritance tax?

AIM (Alternative Investment Market) shares are stocks listed on the London Stock Exchange's junior market. Many AIM shares qualify for Business Property Relief (BPR), which currently provides 100% relief from IHT after a two-year holding period. From April 2026, AIM shares will only qualify for 50% BPR relief, giving an effective 20% IHT rate instead of 0%.

What is the difference between EIS, SEIS, and VCT investments?

EIS (Enterprise Investment Scheme) offers 30% income tax relief on investments up to GBP 1,000,000 per year, plus IHT exemption after two years. SEIS (Seed Enterprise Investment Scheme) offers 50% relief on investments up to GBP 200,000, targeting earlier-stage companies. VCTs (Venture Capital Trusts) offer 30% income tax relief on investments up to GBP 200,000 but do NOT qualify for BPR, so they are not IHT-efficient.

What is longevity investing?

Longevity investing targets the GBP 600 billion+ market in extending healthy human lifespan. Key sectors include: senolytics (clearing damaged cells), gene therapy, AI-driven drug discovery, and age-related disease treatment. The investment thesis is that extending healthspan creates enormous economic value. Most exposure for private investors is via biotech ETFs, EIS-qualifying biotech funds, or direct investment in listed pharma/biotech companies.

What investment vehicles qualify for Business Property Relief?

BPR qualifying assets include: unquoted trading company shares (100% relief up to GBP 2.5M from April 2026), AIM-listed shares (50% relief from April 2026), interests in trading partnerships, and sole trader businesses. Property investment companies, quoted shares on the main market, and investment holding companies generally do not qualify.

Should I consider private equity for IHT planning?

Private equity can offer IHT advantages if the underlying investments qualify for BPR. Some specialist IHT-focused portfolio services invest in a diversified portfolio of unquoted trading companies. The trade-off is illiquidity (typically 3-7 year lock-ups), higher fees, and concentration risk. These are suitable for investors who can commit GBP 50,000+ and have sufficient liquid assets elsewhere.

How do investment bonds help with estate planning?

Investment bonds offer tax deferral (no annual tax on gains within the bond), the ability to withdraw 5% of the original investment each year tax-free, and assignment to beneficiaries without a chargeable event. However, they do NOT provide IHT relief - the full value is included in your estate. They are useful for income tax planning but should not be confused with IHT-efficient vehicles.

What are the risks of IHT-motivated investing?

The main risks are: (1) concentration risk - overweighting in BPR-qualifying assets, (2) liquidity risk - some qualifying assets are illiquid, (3) regulatory risk - the government can change BPR rules (as it did in 2026), (4) company-specific risk - AIM companies are generally smaller and more volatile, (5) holding period risk - BPR requires a minimum two-year hold, and dying within that period means no relief.

How much should I allocate to IHT-efficient investments?

This depends entirely on your circumstances. As a general framework: ensure you have sufficient liquid assets for living expenses and emergencies first, then consider allocating surplus capital to BPR-qualifying investments. A common approach is to hold the amount equal to your potential IHT liability in qualifying investments. For a GBP 5,000,000 estate with an estimated GBP 1,870,000 IHT bill, targeting GBP 1,870,000 in BPR-qualifying assets would theoretically eliminate the liability.

Investment Intelligence

Q: How should I think about investing in AI as a private investor?

AI is a structural shift, not a hype cycle. Institutional capital is flowing into: (1) infrastructure (chips, data centres, cloud), (2) foundation model companies, (3) application-layer businesses using AI to transform existing industries. For private investors, exposure through listed equities (Nvidia, Microsoft, Alphabet) is the most liquid route. EIS-qualifying AI startups offer tax advantages but carry significantly higher risk.

Q: Are AIM shares still worth investing in after the 2026 changes?

AIM shares will still provide 50% BPR relief from April 2026, meaning an effective IHT rate of 20% rather than 40%. This is still a significant reduction. For a GBP 1,000,000 AIM portfolio, you would save GBP 200,000 in IHT compared to holding the same amount in non-qualifying assets. The key question is whether the investment returns and additional risk of AIM shares justify the IHT saving for your specific circumstances.

Tax-efficient investment strategies for UK estates over GBP 1M. AIM shares, EIS/SEIS, BPR portfolios, and growth sectors.

Reviewed by [Reviewer Name], Chartered Accountant (CA)

Updated: February 202512 min read

TLDR

-AIM shares currently offer up to 100% BPR relief. From April 2026, this drops to 50% (effective 20% IHT rate).
-EIS offers 30% income tax relief plus IHT exemption after 2 years. SEIS offers 50% relief but targets earlier-stage companies.
-VCTs offer 30% income tax relief but do NOT qualify for BPR - they are not IHT-efficient.
-Specialist BPR portfolio services invest in diversified unquoted trading companies for IHT relief.
-Growth sectors: AI infrastructure, longevity biotech, and climate tech offer long-term return potential alongside tax efficiency.

AIM Shares for IHT Relief

AIM-listed shares have been one of the most accessible IHT planning tools for private investors. Many AIM companies qualify for Business Property Relief, which has historically provided 100% IHT exemption after a two-year holding period. From April 2026, AIM shares will qualify for only 50% BPR - giving an effective IHT rate of 20% rather than 0%.

Despite the reduced relief, a 20% effective rate is still significantly better than the standard 40%. For a GBP 1,000,000 AIM portfolio, you would save GBP 200,000 in IHT compared to holding the equivalent in non-qualifying assets. The key consideration is whether the investment returns and additional volatility of AIM shares justify the IHT benefit.

IHT-efficient investment vehicles compared
Vehicle	IHT Relief	Income Tax Relief	Min. Holding	Risk Level	Liquidity
AIM BPR shares	50% (from Apr 2026)	None	2 years	High	Good (listed)
EIS	100% BPR	30% income tax	2+ years	Very high	Low (3yr lock-in)
SEIS	100% BPR	50% income tax	3 years	Very high	Low (3yr lock-in)
VCT	None	30% income tax	5 years	High	Moderate (listed)
BPR portfolio (unquoted)	100% to GBP 2.5M	None	2 years	Medium-High	Low
Investment bonds	None	Tax deferral	None	Varies	Good
ISA	None	Tax-free growth	None	Varies	Excellent

EIS, SEIS, and VCT Investments

The Enterprise Investment Scheme (EIS) offers 30% income tax relief on investments up to GBP 1,000,000 per tax year, plus 100% BPR after two years. It targets established companies seeking growth capital. The Seed Enterprise Investment Scheme (SEIS) offers a more generous 50% income tax relief but is limited to GBP 200,000 per year and targets very early-stage companies with higher failure rates.

Venture Capital Trusts (VCTs) are a common source of confusion: they offer 30% income tax relief and tax-free dividends, but they do NOT qualify for Business Property Relief. VCTs are income tax planning tools, not IHT planning tools. If your primary objective is IHT mitigation, EIS or direct BPR-qualifying investments are more appropriate.

AI Investing for Private Investors

Artificial intelligence represents a structural economic shift. Institutional capital is concentrated in three layers: infrastructure (semiconductor manufacturers, data centre operators, cloud providers), foundation models (the companies building large language models and other AI systems), and application-layer businesses using AI to transform existing industries.

For private investors, the most liquid route is through listed equities. EIS-qualifying AI startups offer tax advantages but carry significantly higher risk. A common approach is to allocate a portion of the portfolio to listed AI infrastructure companies (lower risk, lower return) and a smaller allocation to EIS-qualifying AI companies (higher risk, tax-advantaged).

Longevity and Biotech Investing

The longevity market targets the science of extending healthy human lifespan. Key sectors include senolytics (clearing damaged cells), gene therapy, AI-driven drug discovery, and treatments for age-related diseases. The investment thesis is that extending healthspan creates enormous economic value. Most private investor exposure comes through biotech ETFs, EIS-qualifying biotech funds, or direct investment in listed pharmaceutical and biotech companies.

The right investment strategy depends on your estate size, risk tolerance, liquidity needs, and time horizon. A vetted investment adviser can help you balance IHT efficiency with your broader financial objectives.

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Important Notice

This content is for informational purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change. Consult a qualified professional before making financial decisions. MoneyBlis is not regulated by the Financial Conduct Authority and does not provide personalised financial advice.