For transfers and deaths on or after 6 April 2026, shares traded on AIM and similar markets that are not “listed” for HMRC purposes qualify for business relief at 50%, not 100%. These shares sit outside the £2.5 million allowance altogether, so the 50% applies whatever their value, but the owner must still have held them for two years and the company must still be a trading company.

What changed for AIM shares on 6 April 2026?

Before 6 April 2026, AIM shares counted as “unquoted” for Inheritance Tax because AIM is a market of a recognised stock exchange but its shares are not on the official list. They therefore fell within section 105(1)(bb) of the Inheritance Tax Act 1984 (IHTA 1984) and, if the other conditions were met, qualified for 100% relief with no upper limit.

Finance Act 2026, Schedule 12, paragraph 12, split these holdings out. Section 105(1) now has a new paragraph (aa) covering “any unquoted shares that are traded on a recognised stock exchange”. Section 104 was rewritten so that the default rate of business relief is 50%, with the 100% rate in section 104(1A) reserved for property within section 105(1)(a), (b) and (bb), and only up to the available 100% relief allowance. Shares within the new paragraph (aa) are not on that list, so they only ever get 50%. HMRC’s guidance at IHTM25570 confirms this and gives the example of a person dying in 2029 leaving AIM shares, which qualify for relief at 50%.

The same 50% rate applies to new paragraph (ac): unquoted shares traded on an exchange outside the United Kingdom that is not a recognised stock exchange. Securities (loan stock and similar) traded on those markets fall within paragraphs (ab) and (ad) and only qualify where they form part of a control holding, again at 50%.

Which shares are caught by the 50% rule?

The test turns on two definitions now written into section 272 of IHTA 1984 by reference to section 1005 of the Income Tax Act 2007. A “recognised stock exchange” is a market designated by HMRC order. Shares are “listed” on it only if they are admitted to trading and included in the official UK list, or officially listed in a qualifying country overseas. AIM shares are admitted to trading on a recognised stock exchange but are not on the official list, so they are unquoted shares traded on a recognised stock exchange.

HMRC publishes tables of designated exchanges and markets. Its guidance stresses that whether a particular share is listed is a question of fact and that HMRC does not designate listed status, so check each holding rather than assuming from the market name. Three broad groups now result:

Type of holding Provision Rate from 6 April 2026
Private company shares not traded on any exchange s105(1)(bb) 100% up to the available allowance, 50% above it
AIM and other unlisted shares traded on a recognised stock exchange s105(1)(aa) 50%
Unlisted shares traded on an overseas exchange that is not recognised s105(1)(ac) 50%
Fully listed shares, non controlling None No relief

Does the two year ownership rule still apply?

Yes. Section 106 still requires the person making the transfer to have owned the shares throughout the two years before the transfer or death. IHTM25570 says the ownership conditions in IHTM25301 must also be satisfied. The usual relaxations still work. Shares received on a reorganisation, takeover or share exchange that is identified with the original holding under sections 126 to 136 of the Taxation of Chargeable Gains Act 1992 inherit the original ownership period, and Finance Act 2026 extended section 107(4) to the new paragraphs (aa) and (ac) so this continues for AIM holdings. Our page on the two year ownership rule covers replacements, inheritances and successive transfers in detail.

The company must also pass the other tests. Section 105(3) excludes shares in a company whose business is wholly or mainly dealing in securities, shares or property, or making or holding investments, and section 112 strips out excepted assets such as surplus cash. An AIM listing does not prove that a company is trading.

Do AIM shares use any of the £2.5 million allowance?

No. From 6 April 2026 the 100% rate for business and agricultural property is limited to a combined £2.5 million per individual, with any value above the allowance relieved at 50% (IHTM25510 and section 124D). GOV.UK lists shares on markets that are not “listed”, such as AIM, among the property that qualifies for 50% relief. HMRC’s overview at IHTM25510 says these shares “are not relevant for the 100% relief allowance”. The practical consequence is that an estate with both a family company and an AIM portfolio keeps the full allowance for the family company shares, while the AIM shares get 50% regardless of size.

What about AIM shares given away before 6 April 2026?

Paragraph 17 of Schedule 12 contains anti forestalling rules. Where AIM shares were given away as a potentially exempt transfer or chargeable transfer between 30 October 2024 and 5 April 2026, and the donor dies on or after 6 April 2026 and within seven years of the gift, relief is restricted to 50% when tax is calculated on death (IHTM25570). Until the donor dies or the seventh anniversary passes, the law assumes the old rules apply, so nothing is payable at the time of the gift.

HMRC’s example: Mahendra gives AIM shares worth £400,000 to his daughter on 27 June 2025 and dies on 9 August 2026. Relief on death is 50%, and if his nil rate band had already been used the tax would be £80,000. Gifts made before 30 October 2024 are unaffected. The transitional rule does not apply to paragraph (ac) shares, so a gift of those before 6 April 2026 keeps 100% relief.

How is the tax worked out on death?

Illustration only. Ruth dies in 2027 owning an AIM portfolio worth £300,000, all held for more than two years in trading companies, plus other assets that use up her nil rate band.

  • Value of AIM shares: £300,000
  • Business relief at 50%: £150,000
  • Chargeable value: £150,000
  • Inheritance Tax at the standard 40% rate: £60,000

Under the pre April 2026 rules the same holding would usually have borne no tax. Tax on shares qualifying for 50% relief can be paid by instalments (IHTM25570), and from 6 April 2026 property qualifying for business relief is also qualifying property for interest free instalments (IHTM30214). See our guide to paying Inheritance Tax by instalments.

What happens if a gift of AIM shares is followed by a sale or a move to the main market?

When the donor dies within seven years of a lifetime gift, section 113A only allows the relief if the recipient still owns the original shares at the donor’s death (or replacement property within section 113B). Section 113A(3A) gives AIM holders some protection: for shares within paragraphs (aa) to (bb) that stayed unquoted throughout, the recipient does not have to show the shares would still be relevant business property at the death. If the company moves to the main market before the donor dies, that protection falls away and a non controlling listed holding is not relevant business property, so relief can be lost.

Switching from AIM into private company shares has its own trap. HMRC’s example at IHTM25313 shows Tunde selling AIM shares worth £500,000 on 7 February 2026 and buying unlisted shares for £600,000. If he dies within two years, the replacement rules in section 107 cap the relief at what the original AIM holding would have received at 50%.

What mistakes come up most often?

  • Assuming an AIM portfolio service still gives 100% relief. The rate is 50% for transfers and deaths from 6 April 2026.
  • Treating a gift made between 30 October 2024 and 5 April 2026 as safe. If the donor dies within seven years, 50% applies.
  • Forgetting that each holding needs two years of ownership and that a portfolio manager switching stocks can restart the clock unless the replacement rules apply.
  • Assuming every AIM company is trading. Investment and property holding companies on AIM do not qualify at all.
  • Using the £2.5 million allowance against AIM shares in the IHT400 workings. They are relieved at 50% outside it; see our guide to completing the IHT400.

For the wider rules on business relief and how it interacts with other property, see Inheritance Tax business relief.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.