Sell AIM Listed Shares due to 50% Property Relief PR and Replace for 100% Relief
Published / Last Updated on 28/03/2026
What Changed? (Autumn Budget 2024)
From 6 April 2026:
- AIM‑listed shares will qualify for 50% Business Relief (BR) (not 100%).
- Unquoted trading company shares continue to qualify for 100% BR (subject to the £2.5M BR/APR combined limit).
What Is Replacement Property Relief?
Replacement Property Relief (RPR) allows an investor to:
- Sell one BR‑qualifying asset, and
- Buy another BR‑qualifying asset,
- While carrying over their BR ownership period.
Key Conditions
To qualify for RPR:
- There must be a direct line from sale → purchase.
- Combined ownership of BR‑qualifying assets must total 2 years within the last 5 years.
- Transitional rules apply to AIM shares replaced before April 2026.
Transitional Rule (Important)
If AIM shares are replaced before 6 April 2026, the new asset inherits:
- The rate of relief that would have applied to the AIM shares had they been retained.
- This applies until the replacement asset has been held for 2 years.
Meaning:
- Before the 2‑year mark → 50% BR
- After 2 years → 100% BR
- Case Study: Megan
Facts
- AIM portfolio value: £350,000
- Held for: Several years
- Sells AIM shares and reinvests into unquoted BR‑qualifying shares on 23 March 2026
If she keeps the AIM shares
From 6 April 2026:
- Only 50% BR
- Chargeable value: £350,000 ÷ 2 = £175,000
- IHT at 40% = £70,000
- Effective rate = 20% of total portfolio
IHT Outcome Based on Date of Death
|
Date of Death |
BR Rate |
Outcome |
|
Before 6 April 2026 |
100% BR |
No IHT on the £350,000 |
|
6 April 2026 – 22 March 2028 |
50% BR |
IHT = £70,000 (based on £350,000 portfolio) |
|
On or after 23 March 2028 |
100% BR |
No IHT (new shares held for 2 years) |
Key Takeaways for Clients
Replacement is not an automatic fix
If death occurs within 2 years of replacing AIM shares, only 50% BR applies.
Timing matters
The 2‑year clock starts from the date of acquiring the new BR‑qualifying asset.
The transitional rule looks backwards
HMRC assesses: “What BR rate would have applied to the original AIM shares if they had been retained?”
After 2 years, full 100% BR is restored
Provided the new asset qualifies in its own right.
Practical Planning Points
- Consider health, age, and life expectancy before switching assets.
- Ensure the replacement is a qualifying trading investment, not an excluded asset.
- Maintain clear documentation showing the direct line between sale and purchase.
- Watch the £2.5M combined BR/APR limit for high‑value estates.
FAQs
Q1. Does selling AIM shares reset the 2‑year BR clock?
Partially.
The ownership period carries over, but the rate of relief depends on the transitional rules until the new asset has been held for 2 years.
Q2. What happens if the replacement asset is bought after 6 April 2026?
The transitional rule no longer applies.
The new asset must be held for 2 full years to qualify for 100% BR.
Q3. Does the £2.5M BR/APR cap apply to AIM shares?
No.
It applies only to unquoted trading shares and agricultural property.
Q4. What counts as a “direct line” for RPR?
HMRC expects:
- Sale proceeds → reinvested into the new BR asset
- Within a reasonable timeframe
- With clear evidence linking the two transactions
Q5. Can clients partially reinvest and still claim RPR?
Yes, but only the portion reinvested into BR‑qualifying assets can benefit.
Example Replacement Property Relief Calculation
Investment Values
|
Description |
Value (Example) |
|
AIM portfolio value |
£200,000 |
|
Date AIM shares sold |
28 March 2026 |
|
Date replacement BR asset purchased |
28 March 2026 |
|
Date of death |
Variable |
|
BR rate on AIM shares from 6 April 2026 |
50% |
|
BR rate on replacement asset after 2 years |
100% |
Core Calculations
Step 1 — Determine BR rate based on date of death
Rule A: Death before 6 April 2026
- AIM shares still qualify for 100% BR
- Replacement asset inherits this
- IHT = £0
Rule B: Death between 6 April 2026 and 27 March 2028
- Transitional rule applies
- HMRC looks back to the rate that would have applied to the AIM shares
- AIM shares would have had 50% BR
- Therefore replacement asset = 50% BR
Chargeable amount: £200,000 \times 50% = £100,000
IHT at 40%: £100,000 \times 40% = £40,000
Rule C: Death on or after 28 March 2028
- Replacement asset held for 2 years
- Full 100% BR applies
- IHT = £0
- Calculator Summary Table
|
Scenario |
BR Rate |
Chargeable Value |
IHT @ 40% |
|
Death before 6 Apr 2026 |
100% |
£0 |
£0 |
|
Death 6 Apr 2026 – 27 Mar 2028 |
50% |
£100,000 |
£40,000 |
|
Death on/after 28 Mar 2028 |
100% |
£0 |
£0 |
