RE: Some recent misconceptions corrected22 Nov 2024 15:18
4. IHT relief on AIM shares to halve
Under current rules, certain AIM shares also qualify for BPR and are therefore eligible for 100% inheritance tax relief if held for at least two years and on death.
This also means that if an ISA is invested in AIM shares (e.g. AIM IHT portfolios), on death the ISA can be passed on free of inheritance tax. Conventional Stocks & Shares ISAs are not eligible for any form of IHT relief.
What is changing?
Prior to the Budget, there were widespread rumours IHT relief on AIM shares might be scrapped.
The reality has proved better than expectations.
Qualifying AIM shares will continue to benefit from IHT relief, but from 6 April 2026 at the reduced rate of 50% – an effective IHT rate of 20%. To clarify, AIM shares do not use up the £1 million IHT-free BPR allowance.
Whilst less favourable than the current rules, this change still allows many AIM shares (including AIM ISA portfolios) to be passed on more tax-efficiently than portfolios of shares listed on the main market (including conventional Stocks & Shares ISAs).