EIS Breaking News: UK Government increases IHT Limits
The government announced today that from April 2026, the threshold at which 100% Business Property Relief (BPR) applies for inheritance tax purposes will increase from £1 million to £2.5 million per individual (and up to £5 million for spouses or civil partners), with 50% relief applying above that level.
What Does This Mean for EIS & SEIS Investors?
- Shares that qualify for Business Property Relief (including EIS-qualifying shares) will now benefit from a much higher 100% IHT relief allowance.
- Investors who have already used the previous £1m BPR allowance will now, from April 2026, be able to hold up to £2.5m of BPR-qualifying assets remaining within the 100% relief band.
- This materially strengthens the role of S/EIS as part of long-term estate planning, following the cap introduced in the 2024 Budget.
- For married couples or civil partners, allowances remain transferable, meaning up to £5m of qualifying business assets may pass free of inheritance tax, in addition to standard nil-rate bands.
- 50% relief continues to apply to qualifying assets above the £2.5m level.
We will share further details once the Finance Bill wording and HMRC guidance are published.
As always, eligibility depends on meeting the standard BPR conditions (including qualifying company status and minimum holding periods), and individual circumstances will differ. The tax treatment of each Fund depends on the individual circumstances of each client and may be subject to change in future. Investors should seek appropriate independent investment and tax advice.
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