Inheritance tax (IHT) remains one of the most significant concerns for UK individuals with estates above the nil-rate band. Traditional IHT planning tools such as gifts and trusts often require seven-year survival periods to be fully effective. SEIS and EIS shares offer a faster route: qualifying for 100% IHT relief through Business Property Relief (BPR) after just two years. With legislative changes arriving in April 2026, understanding how these reliefs work and how they are changing is critical for effective estate planning.
How BPR Works for SEIS and EIS Investors
Business Property Relief exempts qualifying business assets from IHT on the death of the owner. Shares in unlisted trading companies — including SEIS and EIS-qualifying companies — have historically attracted 100% BPR, provided they have been held for at least two years and are still owned at the time of death. This means an investor holding SEIS or EIS shares for two years can effectively remove those assets from their estate for IHT purposes.
Importantly, there is no upper limit on the amount that can be invested in SEIS and EIS companies for IHT purposes, although the tax reliefs themselves are subject to the respective annual limits. The two-year qualifying period is significantly shorter than the seven years required for gifts or potentially exempt transfers.
What Changes in April 2026
From 6 April 2026, the government is introducing a £1 million cap on assets qualifying for 100% Business Property Relief. This cap applies to the combined value of all qualifying business property and agricultural property. Above this threshold, assets qualify for 50% BPR, resulting in an effective IHT rate of 20%.
For investors with significant SEIS and EIS portfolios, this change means that assets above £1 million will no longer be fully exempt from IHT. However, SEIS and EIS shares remain among the most tax-efficient IHT planning tools available, offering a 50% effective rate on amounts above the cap compared to the standard 40% IHT rate on unrelieved assets. The unused £1 million allowance can also be transferred to a surviving spouse.
Strategic Considerations for 2026
Investors with existing SEIS/EIS portfolios exceeding £1 million should review their estate planning with their adviser before April 2026. Investments made before 6 April 2026 will still benefit from BPR, but will be subject to the new £1 million cap on death. There is no grandfathering of existing holdings.
Married couples and civil partners can effectively access a combined £2 million of 100% BPR by utilising the transferable allowance. SEIS/EIS should be part of a broader estate plan that may also include gifts, trusts, life insurance, and other reliefs.
Why Haatch for IHT-Focused Investors
The Haatch SEIS Fund invests in a diversified portfolio of 10–15 pre-seed B2B SaaS companies, spreading the concentration risk that comes with holding individual unlisted shares for IHT purposes. The EIS Fund offers further diversification at seed stage. Both funds are managed by FCA-regulated Haatch Ventures LLP, backed by British Business Investments, and independently reviewed by Hardman & Co. The two-year BPR qualifying period aligns with Haatch’s typical hold periods, making the funds a natural fit for IHT planning alongside the broader SEIS and EIS tax benefits.
Plan Your Estate with Haatch
Estate planning is personal. Contact Haatch’s investor relations team or speak with your IFA about how the SEIS and EIS Funds could fit within your IHT strategy.
