Do you pay Inheritance Tax on shares?

You will pay Inheritance Tax on shares as part of the wider Inheritance Tax bill that is charged to the whole estate. This is applied to the estate value that sits above £350,000, the nil rate band. 

Shares are not taxed individually, but they contribute to the total value of the estate, which ultimately determines how much Inheritance Tax you pay.

As an executor of an estate, covering an Inheritance Tax bill can put a huge weight on your shoulders.

It also often sits amongst other urgent estate expenses like legal fees or repair costs.

Not only can this all add up, but the 6-month deadline payment deadline for IHT means you have to gather the funds very quickly.

Even if the estate could produce the funds by selling off assets, probate is required before this can happen, and your Inheritance Tax bill has to be paid in order to obtain probate. 

That’s where Provira’s Estate Advance can help.

Our specialist loan offers executors up to 50% of the total net value of the estate within days. 

Not only this, but we handle all HMRC payments directly, charge simple interest, not compound interest, and don’t ask for monthly repayments. The loan is simply repaid in full once the estate has been settled. 

Sound like it might be for you? Fill out our form today to learn more from our team.

When do you pay Inheritance Tax on shares?

The estate will pay Inheritance Tax (IHT) on shares as part of the overall IHT bill within 6 months of the date of death. This is the strict HMRC payment deadline. It’s important to note that as shares cannot be charged IHT in isolation, any tax due on the estate will be charged at the same time. 

Any payments made after the 6-month deadline will be charged interest and estates might receive additional penalties.

That’s why being practical about estate planning to make the most of tax-free allowances can help executors and beneficiaries further down the road. 

Which shares are exempt from Inheritance Tax?

There are a number of different forms of relief that can make the total estate, including shares, exempt from Inheritance Tax. These exemptions include tax-free allowances, Business Property Relief, and spousal exemptions. 

Remember, shares are not individually charged Inheritance Tax, they are included in the total value of the estate which determines how much Inheritance Tax is due.

Also, understanding the type of share and how this is categorised by HMRC is vital in order to work out whether you can apply relief or not.

Tax-free allowances

Estates are able to pass on up to £325,000 before they have to pay any Inheritance Tax at all. This is called the nil rate band. This applies to the total estate value, which includes shares.

If a main home is left to a child or grandchild, an additional £175,000 allowance is applied – this is called the residence nil rate band – taking the total tax-free allowance to £500,000.

Spousal exemptions

If couples are married or civil partners, these tax-free allowances can be combined. This means that up to £1 million can be passed on tax-free if it includes a main home.

This can significantly reduce an Inheritance Tax bill, which, when its due within 6 months and often before assets can be sold to create cash flow, can help prevent a big financial burden.

Business Property Relief

This type of relief protects family businesses from having to sell parts of the company in order to pay Inheritance Tax, enabling it to remain whole and keep operating efficiently. To benefit from this relief, you must meet certain criteria.

While historically this has been a generous allowance, as of April 2026 only the first £2.5 million of combined business and agricultural property receives 100% relief. Anything above this level receives 50% relief. 

This is predicted to have a huge impact on IHT bills as, if the value of your business bumps the estate above the £2.5million threshold, you will need to pay far more Inheritance Tax.

Shares can qualify for BPR if:

• You have owned them for at least two years.
• They are unlisted/Private Company shares that are invested in genuine trading businesses and private limited companies.

Additionally, shares can qualify for BPR if they are Alternative Investment Market shares. Having AIM shares has been used to reduce Inheritance Tax bills for a long time, but it is important to note that, as of April 2026, they are only eligible for 50% relief, down from 100%. 

Can I gift shares to avoid Inheritance Tax?

Yes, you can. It is a useful way to pass down wealth without facing a high Inheritance Tax bill. You can gift them by considering:

The 7-year rule

As with gifting any asset, if a share is gifted more than 7 years before the date of death, they become outside your estate and are entirely IHT-free. If you die within 7 years of gifting the share, it can be taxed up to the full 40%. 

This is particularly relevant now for businesses. When gifting business shares there’s a strong chance they qualify for Business Property Relief. There used to be no upper limit to this, so businesses were able to benefit from 100% IHT relief.

As of April 2026, there will be a £2.5 million cap. So now, if the gifted share doesn’t pass the 7 year mark, it is added to the value of the estate which could bump more of it above the threshold, increasing your tax bill.

Annual gifting exemptions

There are a few annual gifting exemptions that don’t have a time limit and are immediately tax-free. 

The good news is that shares can be gifted under these exemptions.

Every person has an annual £3000 tax-free gift allowance per person, per year. If you don’t use your allowance, you can carry one year into the next. That means you can gift up to £3,000 worth of shares every year, tax-free.

Another allowance is for wedding gifts. For this, you are able to gift up to £5000 to children, up £2500 to grandchildren and up to £1000 to anyone else and not pay a penny of tax on them. This is in addition to your annual allowance. 

You are also able to gift small gifts of up to £250 per person to an unlimited number of people tax-free. Although, you cannot combine this with any other allowance so they have to have different recipients.

Type of share

As we discussed above, business shares are likely to fall under Business Property Relief. While this is a huge help for reducing an Inheritance Tax bill, the recent changes to BPR mean timing now needs to be thought about. 

Shares that don’t qualify for BPR can take advantage of the 7-year rule or, based on where they’re placed, work out what other relief might be available. 

We recommend discussing your estate planning with specialists to find the best way to reduce the amount of Inheritance Tax that will need to be paid on your estate.

How Provira can help pay Inheritance Tax on shares

It’s important to take specialist financial and legal advice around how to reduce your Inheritance Tax bill, particularly when the estate has lots of different assets, including shares.

Inheritance Tax bills can often seem like an impossible obstacle for an executor. If you are dealing with a complex estate 

We speak with families every day who are struggling to cover their Inheritance Tax bill before the 6 month deadline due to estate money being tied up in assets.

That’s where our Estate Advance loans offer a simple solution. We offer:

• Up to 50% of the net value of the estate within just a few days
• To work directly with HMRC payments and solicitors to meet the IHT deadline
• Simple interest charges, not compound interest
• No early repayment fees or monthly repayments. We are paid back in full when the estate is settled.
• An underwriter dedicated to support you through your case

Start your application today. It takes just a few minutes.