One of the quieter features of holding unquoted shares is what happens to them when you die. For decades, qualifying trading-company shares - which most EIS holdings are - could pass to your heirs free of inheritance tax under Business Property Relief, often at 100%. It rarely made the pitch deck, but for an estate of any size it was real money.
From 6 April 2026 that relief is no longer unlimited. The 100% band is now capped at £2.5m per person, with anything above it relieved at 50%. The figure itself has a history worth getting straight, because a lot of the coverage you'll find still quotes the wrong one. Here is how BPR works on EIS shares, what the cap actually does, and why it matters less as a reason to invest than you might think.
BPR can be a useful feature of an estate. It was never a reason to buy the shares.
How Business Property Relief works
Business Property Relief reduces the value of certain business assets when working out the inheritance tax due on an estate. For unquoted shares in a qualifying trading company, the relief has been 100% - meaning those shares, in principle, fell out of the taxable estate entirely. Inheritance tax is charged at 40% on value above the nil-rate bands, so on a sizeable holding the relief is far from a footnote.
Two conditions do the heavy lifting. The shares must normally have been held for at least two years by the date of death, and the company must be a genuine trading business rather than mainly an investment vehicle - companies dealing wholly or mainly in securities, land or investments are excluded. Crucially, the shares must still be owned at death; sell them in your lifetime and the relief simply doesn't arise on that holding. HMRC sets out the qualifying conditions in its guidance on Business Relief.
What changed on 6 April 2026
Until April 2026, the 100% relief had no ceiling. From 6 April 2026 it does. Each person now has a combined £2.5m allowance for assets that previously got 100% relief - business property and agricultural property together share the one limit. Value within the allowance keeps 100% relief; value above it drops to 50% relief, which still helps but leaves the excess effectively taxed at 20% rather than the full 40%.
The number deserves a clear correction, because the early reporting got overtaken by events. When the cap was first announced in October 2024 it was set at £1m, and a great deal of commentary - some still live - quotes that. It was revised up to £2.5m on 23 December 2025. If a piece you're reading says £1m, it predates that change. The allowance is also transferable between spouses and civil partners, so a couple can, between them, shelter more than one person's limit at 100%.
One distinction matters for angels in particular. AIM-quoted shares, and other recognised-but-unlisted holdings, get 50% relief only - they sit outside the 100% band altogether. Unquoted shares are the ones in the 100%, now-capped, band.
Where EIS shares sit
EIS investments are, by design, holdings in unquoted trading companies. That places them in the 100% relief band - the capped one - rather than the 50% band that catches AIM shares. After the two-year hold, a qualifying EIS holding still owned at death can, in principle, attract 100% BPR up to the £2.5m combined cap, with 50% on any value above it.
The word doing the work there is can. BPR is conditional and is assessed at the date of death, not at the date you invest. The company has to still be a qualifying trading business at that point; if it has shifted into investment activity, listed, or stopped trading, the relief on those shares may not apply. BPR also sits separately from the income tax and capital gains reliefs you may already have claimed under EIS - it is its own test, with its own conditions, and meeting the EIS rules does not guarantee it.
Note too that BPR and the EIS holding period are different clocks. EIS income tax relief is anchored to a three-year hold; BPR turns on roughly two years and on the shares being held when you die. The two can overlap, but they are not the same requirement.
What the cap means in practice
For most angels, the honest read is that the cap changes little. A £2.5m allowance per person, transferable to a spouse, is a high ceiling relative to the size of a typical EIS portfolio. The investors it actually bites are those holding very large unquoted positions, where value above the combined cap now attracts 50% relief instead of 100%.
To make the bands concrete, in general terms: value within the £2.5m allowance keeps full relief; value above it is relieved at 50%, so on the excess the effective inheritance-tax charge is around 20% rather than 40%. Those are illustrative mechanics, not a calculation for your estate - the actual figures turn on your nil-rate bands, the rest of your estate, any spousal transfer and the precise mix of assets.
The more useful point is about why anyone holds these shares in the first place. A possible estate-tax benefit on death is a feature of owning qualifying unquoted shares; it is not, on its own, a sensible reason to take on the risk of early-stage companies, which can and do go to zero. The relief sweetens an estate. It doesn't change what the underlying investment is.
A note on what this isn't
This is general information, not financial or tax advice, and inheritance tax is one of the more intricate corners of the UK system. BPR is conditional, assessed at death, and depends on facts - the company's activity, your holding period, the wider estate - that can change between now and then. The rules themselves shift: the journey from £1m to £2.5m in barely a year is the proof. Confirm the current position in HMRC's guidance on Business Relief for inheritance tax and the wider venture capital schemes guidance, and take FCA-regulated advice and qualified tax or estate-planning advice before you act.
Frequently asked questions
Do EIS shares avoid inheritance tax?
They can, but not automatically. EIS investments are usually shares in unquoted trading companies, which can qualify for Business Property Relief. After the shares have been held for around two years and provided they are still owned at death and the company still qualifies, the relief can be 100%, but from 6 April 2026 that 100% relief is capped at £2.5m per person, with 50% relief above the cap. It is conditional and assessed at the date of death.
Is the BPR cap £1m or £2.5m?
It is £2.5m per person from 6 April 2026. The £1m figure was the cap first announced in October 2024, but it was revised up to £2.5m on 23 December 2025. So if you have read £1m, that number is out of date. The £2.5m is a combined allowance covering both business and agricultural property, and it can be transferred between spouses and civil partners.
How long must shares be held for BPR?
Generally at least two years, and the shares must still be held at the date of death. This is a different test from the three-year holding period for EIS income tax relief, so the two clocks do not line up exactly. If qualifying shares are sold during your lifetime, Business Property Relief does not arise on that holding.
Do AIM shares get the same relief as EIS shares?
No. AIM-quoted shares and other recognised-but-unlisted holdings get 50% Business Property Relief, not 100%. Unquoted trading-company shares, which most EIS holdings are, sit in the 100% band, which is the one now capped at £2.5m per person from 6 April 2026. The bands are different, so the inheritance-tax treatment differs.
Is this inheritance-tax treatment financial advice?
No. This is general information about how the rules work, not advice for your situation. Inheritance tax is complex, Business Property Relief is conditional and assessed at death, and the rules change with each Budget. Confirm the current position at GOV.UK and take FCA-regulated advice along with qualified tax or estate-planning advice before acting on any of it.