“BPR change will make gifting strategies more appealing for some”, according to M&G Wealth’s Les Cameron

With the news that business property relief for inheritance tax will drop in 2026, we have spoken to several experts to find out whether they think this will affect investors’ interest in EIS investments.

So far, we have spoken to Love Ventures’ Marcus Love and Oxford Capital’s Mark Bower-Easton. This week, we are joined by Les Cameron, Head of Technical at M&G Wealth. Les outlines how he expects EIS investments to change in the next few years.

1.) With BPR IHT relief due to drop from 100% to 50% in 2026, does that change how you view EIS investments?

From 2026, BPR IHT relief will be 100% up to £1m and then 50% thereafter. Our IHT offering is the use of trusts to make gifts, allowing the donor to keep control of the money with the level of access they require. We expect the BPR change will make gifting strategies more appealing for some.

2.) Do you still see EIS as one of the best tax-efficient options, or does this shift how you think about its overall appeal?

Where IHT relief is the primary purpose there will undoubtedly be those who do not believe that the inherent risk of investing in unquoted businesses is worth the potential IHT upside. Many people believe that business relief investment is outside their estate and IHT-free after holding for two years, which is incorrect.

The asset is always in your estate for purposes such as the residence nil rate band taper and you only get the IHT saving if the relief is still available when you die.  As we have seen with the changes announced in the most recent Budget, the savings you thought you would get when you first invested may no longer be available.

3.) Will the cutting of BPR IHT relief change how attractive EIS is for investors in general?

EIS is still a very tax efficient investment option as they have valuable income tax and capital gains tax reliefs. The IHT savings, although lessened, are currently still available meaning this investment option will still be popular depending the individual’s objectives. The halving of relief for AIM investments may see some AIM investors moving over to unquoted investments for their IHT planning. It may be sensible to pause before taking any action until further details of the change are known.

Les Cameron leads the M&G Wealth Technical Team, working to maintain their position as one of the most widely respected technical support units in financial services. He has held this title for 3 years, joining the company in December 2021.