IHTM25570 | AR/BR: 50% rate – unlisted shares and securities

From 6 April 2026, certain categories of unquoted shares and securities no longer qualify for relief at 100%; relief is available at 50% only under IHTA84/S104.

FA26/Sch12/Para 12 amends the definition of relevant business property in IHTA84/S105(1) by inserting new categories of unquoted shares and securities. These categories are treated differently from other unquoted holdings and are subject to a reduced rate of relief.

Categories qualifying only for 50% relief

The categories affected are:

• IHTA84/S105(1)(aa)
  Any unquoted shares that are traded on a recognised stock exchange.

• IHTA84/S105(1)(ab)
  Any unquoted securities that are traded on a recognised stock exchange which, together with any other unquoted shares or securities, give the transferor control of the company.

• IHTA84/S105(1)(ac)
  Any unquoted shares that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange.

• IHTA84/S105(1)(ad)
  Any unquoted securities that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange which, together with any other unquoted shares or securities, give the transferor control of the company.

Although shares and securities within these categories remain relevant business property, they no longer qualify for relief at 100%. Relief is restricted to 50%, and such property is not relevant to the 100% relief allowance.

Unquoted shares and securities that do not fall within these new categories (e.g. because they are not traded on a recognised stock exchange) may still qualify as relevant business property under IHTA84/S105(1)(b) (unquoted shares) or (bb) (unquoted securities which are part of a control holding). Where applicable, those holdings can qualify for relief at 100%, subject to the availability of the 100% relief allowance (see IHTM25171 and IHTM25191).

References to a “recognised stock exchange” are defined in IHTA84/S272 by reference to ITA07/S1005. See IHTM18131.

This page outlines the changes in the rate of relief. The ownership conditions (see IHTM25301) must also be satisfied for relief to be available.

Transitional provisions

Special transitional provisions apply in some cases involving these shares (see Finance Act 2026/Schedule 12/Para 17(1)-(4)).

Where shares fall within IHTA84/S105(1)(aa) and a potentially exempt transfer or chargeable transfer of such shares is made between 30 October 2024 and 5 April 2026, and the transferor dies within 7 years of the transfer on or after 6 April 2026, relief is restricted to 50% when the tax charge on death is calculated.

From 6 April 2026, securities within IHTA84/S105(1)(ab) which are part of a control holding get relief at 50%. Where a potentially exempt transfer or chargeable transfer of such securities is made between 30 October 2024 and 5 April 2026 (whether or not that holding gave the transferor control) and the transferor dies within 7 years of the transfer on or after 6 April 2026, relief is restricted to 50% when the tax charge on death is calculated.

Shares and securities within IHTA84/S105(1)(ac) and (ad) are not subject to any transitional provisions, so that if the transfer was before 6 April 2026, 100% relief is available.

Instalments

Any shares or securities that qualify for relief at 50% qualify for payment of tax by instalments (see IHTM30191).

Example 1 – after 6 April 2026

Jake dies on 5 August 2029 and leaves shares in A Ltd to John.

The shares in A Ltd are unquoted and are traded on the Alternative Investment Market of the London Stock Exchange, which is a recognised stock exchange.

The shares are relevant business property under IHTA84/S105(1)(aa) and therefore qualify for relief at 50%.

Example 2 – after 6 April 2026

On 7 July 2029 Rob settles shares in Company X and Company Y into trust. This is an immediately chargeable transfer.

Shares in Company X are unquoted and are traded on the Portfolio Stock Exchange in Spain, which is not a recognised stock exchange.

Shares in Company Y are unquoted and are not traded on any stock exchange.

The shares in Company X are relevant business property under IHTA84/S105(1)(ac) and therefore qualify for relief at 50%.

The shares in Company Y are relevant business property under IHTA84/S105(1)(bb) and therefore qualify for relief at 100%, up to the value of the available 100% relief allowance.

Example 3 – transitional provisions

Mahendra makes a gift of AIM shares worth £400,000 to his daughter Kundan on 27 June 2025. This is a potentially exempt transfer.

Mahendra dies on 9 August 2026. The transitional provisions apply because the gift was made between 30 October 2024 and 5 April 2026, and Mahendra died within 7 years of the transfer on or after 6 April 2026.

When the tax is calculated on death on the potentially exempt transfer which has become chargeable, relief at 50% is available on the shares. If Mahendra had already used his nil rate band on earlier transfers, the tax chargeable would be:

£400,000 × 50% = £200,000 × 40% = £80,000