In 1992, football changed one rule and transformed the sport.
The 1990 World Cup had been, by common consent, dreadful. Teams would go a goal up and then simply pass the ball back to their goalkeeper, who’d pick it up, bounce it, roll it out, and wait for someone to pass it back to him again. Minutes evaporated. So FIFA brought in the back-pass rule: a goalkeeper could no longer handle a deliberate pass from his own team-mate.
Overnight, the safe option stopped being safe. Defenders had to learn to play under pressure. Goalkeepers had to learn to use their feet. Tactics that had worked for decades became liabilities, and the teams that adapted fastest did best.
Tax planning has just had its back-pass moment.
For years, one of the most familiar ways to reduce inheritance tax was to hold shares in companies listed on AIM, the London Stock Exchange’s junior market. Many AIM companies qualified for Business Relief, and once you’d held them for two years, they could pass on your death completely free of inheritance tax. They were listed, so you could buy and sell them; you could even hold them inside an ISA. A comfortable, familiar route.
From 6 April 2026, the rule changed. AIM shares now qualify for only 50% relief, which leaves an effective inheritance tax rate of 20% rather than nothing. And they don’t benefit from the new £2.5m allowance at all.
Under the new regime, the first £2.5m of combined qualifying business and agricultural assets still gets 100% relief, with 50% above that. It can be passed between spouses, so a couple can shelter up to £5m. Unlisted shares qualify for it. AIM shares don’t.
Which has rather reshuffled the comparison with the Enterprise Investment Scheme.
EIS is the government’s scheme for encouraging investment into small, early-stage, unlisted companies. Because those companies are unlisted, EIS shares can qualify for Business Relief within the £2.5m allowance, so after two years they can pass with 100% relief. But inheritance tax is only one of the reliefs on offer. Based on current legislation, EIS also gives 30% income tax relief up front on up to £1m a year, gains free of capital gains tax if held for three years, the ability to defer a capital gain from elsewhere by reinvesting it, and relief against income tax if a company fails.
Put an illustrative £500,000 in each and the gap is stark. Held in qualifying AIM shares at death, half the value is relieved and half is taxed at 40%: an inheritance tax bill of around £100,000. Held in qualifying EIS shares within the allowance, the bill could be nothing at all, and the investor may have received £150,000 of income tax relief on the way in.
On paper, then, EIS now looks like the stronger tax package by some distance.
But this is where the back-pass rule has a lesson of its own. Changing the rules didn’t make the game safer. It made it harder.
EIS companies are small, young and unproven. Many will fail. The shares are hard to sell and you may have to hold them for years with no idea when, or whether, there’ll be an exit. The tax reliefs exist precisely because the risk is so high; they’re the government’s way of paying you to take it. Make the relief the reason to invest, rather than a cushion for an investment you’d want anyway, and you’ve let the tax decide the investment.
There’s a subtler point too. The £2.5m allowance is shared across all your qualifying business and agricultural assets. For someone who already owns a trading business or farmland, adding EIS may simply compete for an allowance that’s already used, in which case EIS above the line would get only 50% relief, like everything else.
AIM, meanwhile, hasn’t become worthless as a planning tool. Fifty per cent relief is still relief, the shares are still more liquid than EIS, and they can still sit in an ISA. It’s just no longer the automatic answer it was.
The teams that did well after 1992 weren’t the ones who pretended nothing had changed, or who threw out everything they knew. They were the ones who sat down and worked out what the new rules actually rewarded, and for whom.
Which is exactly the conversation worth having now, ideally before any clock starts ticking.
We help people in Hook and across Hampshire, Surrey, Berkshire, Sussex and Kent work out what the new inheritance tax rules mean for their own mix of assets, and whether any of these tools fit at all.
Altor Wealth Management LLP is authorised and regulated by the Financial Conduct Authority (FCA number 769033). Registered office: Landmark House, Station Road, Hook, Hampshire RG27 9HA. This article is general information, not personal advice or a recommendation to invest in any scheme or security. EIS and AIM investments are high risk: they are typically illiquid, you may lose all of your capital, and the value of investments can fall as well as rise. Tax reliefs depend on the investee company maintaining qualifying status and on individual circumstances, and are based on current legislation, which can change. Figures are illustrative only.