Following the news that business property relief for inheritance tax will drop in 2026, we have reached out to experts to find out their thoughts, and whether they see this being an issue for EIS investments.
After last week’s interview with Love Ventures, we are joined this time by Mark Bower-Easton, Head of Distribution at Oxford Capital. Mark reveals how this might change how his company operates, and whether EIS is more or less attractive for investors following the announcement.
1.) Are you planning to adjust your strategy following the news that BPR IHT relief will drop from 100% to 50% in 2026?
The recent autumn statement has been viewed positively by Oxford Capital. It has given investors and advisers clarity regarding what lies ahead from a personal and business taxation perspective, and reaffirms to fund managers the government’s backing of EIS. Sure, the upcoming BPR rule changes will affect how much IHT can be saved by investing in EIS, but the IHT benefit is only one small piece of the puzzle.
We have made some significant and positive changes to our EIS Fund for 2024, but there was nothing in the autumn statement that made us feel the need to adjust our strategy or focus further than we had already completed.
2.) Now that BPR IHT savings are being halved in 2026, do you still see EIS as one of the best tax-efficient options, or does this shift how you think about its overall appeal?
IHT relief is just one component of a number of EIS tax benefits. It needs to be remembered that there will still be the full benefit up to £1m, and paying 20% IHT rather than 40% is still a very significant saving.
If you look at the various tax reliefs available across VCT/EIS/BR products, EIS is still by far the most attractive option from a tax perspective, unless you are looking to generate a tax-free income, obviously. The fact of the matter is that very few investors invest in EIS when IHT mitigation is the sole driver in their decision making process.
3.) Do you think cutting BPR IHT relief will make EIS less appealing for investors in general?
No, not at all. At Oxford Capital, our view is that investors invest with us because they want access to the best quality early-stage businesses, which provides them with the greatest opportunity for successful investment outcomes. The tax reliefs, in our view, are an added benefit. Of course, from a financial planning perspective, EIS is a great holistic tax planning tool, but that’s not why we do it.
With the proposed changes to IHT rules regarding AIM shares, I actually think EIS may become even more popular for those looking to shield their estates from IHT.
Mark has over 20 years of experience in financial services, and has been a member of the Oxford Capital team since 2021. As Head of Distribution, Mark has responsibility for sales, marketing, product development and account management for key wealth management partners, private clients and family offices. He also sits on Oxford Capital’s Investment Committee.
