£5m IHT Free? Are Private Equity & Private Company Shares the IHT Investment Solution?
Published / Last Updated on 22/01/2026
We keep repeating the Treasury’s record inheritance tax (IHT) receipts over the last few years with the trend set to get even worse in 2027 when unused pension funds become part of our estate and therefore potentially subject to IHT.
This government is chasing an even greater share of your wealth, never forget
- Capital gains tax allowance on property, shares and other investments has been reduced to just £3,000 and we expect capital gains tax rates to increase in the future.
- Investment income from Savings, Property and Dividends will all have income tax rates increased ‘across the board’ by 2% in 2026 and 2027.
- Agricultural Property Relief and Business Property Relief (currently 100% protection from IHT for each) was to be reduced to a new, combined Agricultural and Business Property Relief of £1m in total. After outrage form many business owners and particularly farmers, this has now been increased to a combined £2.5m from April 20206, that said, this is still yet another tax on businesses and farmers on death for assets in excess of £2.5m.
Most people do not own farmland or have business interests so will not take advantage of Agricultural and Business Property Relief. We really should.
Existing Inheritance Tax Nil Rate Bands
- £325,000 Inheritance Tax Nil Rate Band
- £175,000 Private residence Nil Rate Band (provided a share of your main home is left to your ‘bloodline’ descendant children/grandchildren)
- £500,000 in total per person.
- If unused on first death or spouse/civil partner, this can be passed to the surviving spouse/civil partner and added to their allowances. Meaning
- £1m total IHT nil rate band allowances on 2nd death.
Additional Agricultural and Business Property Relief ‘Nil Rate Band’
- £2.5m agricultural and business property relief per person.
- If unused on first death or spouse/civil partner, this can be passed to the surviving spouse/civil partner and added to their allowances. Meaning
- £5m total IHT nil rate band allowances on 2nd death for Agricultural and Business Relief.
That’s up £6m that can be left to loved ones, inheritance tax free on death with the right financial planning by investing in agriculture and business.
Qualifying Business Assets for Agricultural and Business Relief
- Do not qualify: Quoted shares on a recognised stock exchange such as FTSE 100, FTSE 250, Dow Jones 30, S&P 500, German Dax, French CAC, Shanghai Composite, the Hang Seng and the Nikkei 225 do not qualify.
- Do not qualify: Venture Capital Trusts as they are ‘listed’ (they already get tax relief when you invest).
Assets that Do Quality (provided investments held for at least 2 years)
- Does qualify: Shares listed on the Alternative Investment Market including brands that you may know such as Arbuthnot Banking Group, Boohoo, Fevertree Drinks, Jet2, M&C Saatchi, Optima Health and Victorian Plumbing to name a few.
- Does qualify: EIS (enterprise investment scheme shares) in addition to the tax relief you receive when you invest.
- Does qualify: Private Equity holdings in established, larger businesses that have the potential to expand. Private equity investments firms are springing up, regulation is developing and you will soon have access to private equity ‘investment funds’
- Does qualify: Shares in closed, private limited ‘trading’ companies e.g., the directors of this website own shares in their own company Roberts Clark IFS Limited as well come other, small, limited companies and also being lifetime supporters of and now shareholders in West Bromwich Albion Group Limited. We full intend to expand our investments in trading limited companies.
Investing in Closed Company Shares:
You too could invest in private equity, private limited companies (both locally and nationally), set up your own limited company business (it must be trading) and even become a ‘Business Angel’.
Dragon’s Den is not just for multi-millionaires, you too could become a mini-dragon ‘Business Angel’, invest in companies and use up some of your £2.5m Agricultural and Business ‘Nil Rate Band’.
