Yes, a trust can hold EIS shares: nothing in company law stops trustees owning them. The tax answer is far less accommodating. In the 2026-27 tax year, EIS income tax relief is worth 30% of the amount subscribed (50% under SEIS) under HMRC's venture capital scheme rules, and the legislation gives it to individuals alone. Trustees cannot claim it, and moving shares into a trust at the wrong moment hands back relief already banked.
The inheritance tax side is where the idea earns its keep, and it changed this spring. From 6 April 2026, 100% Business Property Relief, the inheritance tax relief on qualifying business assets, is capped at the first £2.5m of qualifying business and agricultural property per person, per the government's December 2025 announcement. The Carry's reading of the new landscape is that the two tax systems now answer the trust question in opposite directions: the EIS rules punish an early transfer, while the reformed relief still leaves a route into trust for shares that have done their three years. Timing decides which answer you get.
The trust can take the shares on day one. The reliefs need more persuading.
Can a trust claim EIS income tax relief?
No. The EIS legislation gives income tax relief to individuals who subscribe for new shares in a qualifying company. Trustees are not individuals for this purpose. A trust that subscribes for EIS shares gets no relief on the way in, and the capital gains exemption that rewards a three-year hold is tied to that relief, so it never arises either.
HMRC's guidance for venture capital scheme investors is written entirely around the individual: your income tax bill, your subscription, your holding period. Deal structure has its own rules, covered in which structures keep SEIS and EIS relief, but no structure smuggles the relief into a trust.
A word on terms. A trust is an arrangement in which trustees legally own assets for the benefit of others; the person who puts the assets in is the settlor. Most lifetime trusts used for family wealth, discretionary trusts above all, fall under what HMRC calls the relevant property regime, the source of the charges in the table above.
What happens if you transfer existing EIS shares into a trust?
Timing decides everything. A gift of EIS shares into a trust is a disposal, and a disposal within three years of the shares being issued withdraws the income tax relief you claimed. The one exception is a transfer to a spouse or civil partner. A trust does not qualify, even one whose only beneficiaries are your children. Move the shares in year two and HMRC asks for the relief back.
After the third anniversary the picture relaxes. Relief already given stays given, and shares that reach that point with the relief intact are generally exempt from capital gains tax when disposed of. Where a gain does arise, holdover relief under section 260 of the Taxation of Chargeable Gains Act may let it be held over rather than taxed at the time; the conditions sit in HMRC helpsheet HS295 and are a matter for specific advice.
Death sits apart. Income tax relief already claimed is not withdrawn when an investor dies, whatever the holding period, so shares passing into a will trust arrive on a different footing from a lifetime gift. The detail belongs with an adviser.
How does Business Property Relief change the picture?
It is the reason anyone asks the question. Settling shares into a relevant-property trust is a chargeable lifetime transfer, taxed in 2026-27 at 20% on value above the £325,000 nil-rate band where the trustees pay, under GOV.UK's trusts and inheritance tax guidance. Business Property Relief can take that charge away. Most EIS-qualifying companies are unquoted trading companies, which sit in the 100% relief band, and where the shares have been owned for two years and still qualify at the date of transfer, the relief can reduce the chargeable value, in many cases to nothing.
From 6 April 2026 there is a ceiling. The 100% rate applies only within the settlor's £2.5m allowance, with relief at 50% above it, so a large enough transfer can carry an entry charge even where every share qualifies. The cap's mechanics, including the spousal transfer of unused allowance, are covered in our page on the 2026 BPR cap. Two cautions belong here: the relief is conditional, never automatic, tested on the facts at the date of transfer, and AIM-listed shares qualify at 50% only under the reform.
The trust also gets an allowance of its own under the reform: £2.5m of 100% relief for its ten-year charges, refreshing every ten years. An allowance allocated to a trust that is later wound up is lost.
What are the ongoing inheritance tax charges on a trust?
Three, and the table above sets them out. The entry charge of 20% above the £325,000 nil-rate band applies when assets go in. At each ten-year anniversary the trust pays up to 6% of its chargeable value, the maximum rate under GOV.UK's trusts and inheritance tax guidance, and up to 6% again when assets leave between anniversaries. And if the settlor dies within seven years, the lifetime transfer is reassessed against the full 40% death rate.
The reliefs matter after entry too. Where the trust's holdings still qualify for Business Property Relief at an anniversary, the trust's own £2.5m allowance can reduce the ten-year charge, so the condition of the underlying companies matters long after the shares go in. Early-stage holdings change. Companies list, get acquired, stop trading, and a holding that qualified on entry may not qualify a decade later.
Not every trust faces these charges: bare trusts and some other types sit outside the relevant property regime, mapped in the GOV.UK overview of trusts and taxes.
Which questions should you take to an adviser?
Five moving parts, so arrive with the questions written down:
- How old are the shares? Inside three years of issue, a transfer into trust hands back the income tax relief. Past three, it does not. Check that date before anything else.
- Does the holding still qualify for Business Property Relief? Two years of ownership, unquoted, still trading, tested at the date of transfer. A portfolio of ten EIS companies can contain qualifying and non-qualifying lines side by side.
- How much of the £2.5m allowance is unused? Other business assets, and gifts made since 30 October 2024, may compete for the same allowance.
- What would the trust charges look like over twenty years? Entry, two ten-year anniversaries and any exits, set against the trust's own allowance.
- What is the trust actually for? Control, asset protection and succession are jobs a trust does well. If the only purpose is tax, say exactly that and let the adviser test whether the structure justifies its running costs.
And the plain statement this subject demands: trust taxation carries decades of anti-avoidance history, HMRC's rules are complex and they change. This article is general information, not financial or tax advice. Check the current position on GOV.UK and put your specific facts in front of an FCA-regulated adviser and a STEP-qualified solicitor before anything moves.
Frequently asked questions
Can a trust claim EIS income tax relief?
No. EIS income tax relief is available only to individuals who subscribe for new shares in a qualifying company. Trustees cannot claim it, so a trust that subscribes for EIS shares receives no income tax relief on the investment, and the capital gains exemption linked to that relief does not arise either. The trust can legally own the shares; the scheme's reliefs do not follow them.
Do you lose EIS relief if you put shares into a trust?
If the transfer happens within three years of the shares being issued, yes: a gift into trust is a disposal, and HMRC withdraws the income tax relief already claimed. The only exception is a transfer to a spouse or civil partner, which a trust is not, whoever its beneficiaries are. Once the three years have passed, relief already given is safe, though the inheritance tax consequences of the transfer still need working through.
Do EIS shares qualify for Business Property Relief in a trust?
Often, but never automatically. Most EIS-qualifying companies are unquoted trading companies, which sit in the 100% relief band, and the shares must have been owned for two years and still qualify at the date of transfer. From 6 April 2026 the 100% rate applies only within the settlor's £2.5m allowance for qualifying business and agricultural property; value above that receives 50% relief, and AIM-listed shares qualify at 50% only.
What are the inheritance tax charges on a relevant-property trust?
Three main ones. An entry charge of 20% on the value settled above the £325,000 nil-rate band, where the trustees pay the tax; a charge of up to 6% of the trust's chargeable value at each ten-year anniversary; and an exit charge of up to 6% when assets leave the trust. If the settlor dies within seven years of the transfer, inheritance tax on the lifetime transfer is reassessed at the full 40% death rate.
Should you put your EIS shares into a trust?
There is no general answer, and this article does not offer one. The outcome depends on the age of the shares, whether they still qualify for Business Property Relief, how much of the £2.5m allowance is unused and what the trust is for. Trust taxation is complex and HMRC's rules change. This is general information, not financial or tax advice: check the current rules on GOV.UK and take advice from an FCA-regulated adviser or a STEP-qualified solicitor before moving shares anywhere.