Business Relief changes driving advisers to reassess IHT planning structures

Changes to Business Relief (BR) are driving advisers to reassess how inheritance tax (IHT) planning is structured, according to Ingenious head of business development, Nick Jones.

Jones noted that while attention has largely been focused on the reduction in relief available on AIM shares, the changes are also prompting a wider shift in how BR strategies are used.

From April 2026, AIM-listed BR-qualifying shares will only have 50 per cent IHT relief, effectively exposing investors to a 20 per cent charge on qualifying AIM assets.

Additionally, a £2.5m allowance for BR and Agricultural Property Relief will apply, and assets above this figure will receive reduced relief.

Jones highlighted that advisers had historically tended to deploy two differing BR approaches, depending on their clients’ objectives.

AIM portfolios had typically been used as capital growth strategies, while unquoted BR-qualifying investments tended to be used as capital preservation tools.

Jones said the April 2026 changes emphasised the need for advisers to focus on the underlying purpose of BR strategies, rather than treated all BR investments as interchangeable.

“AIM has long played a prominent role in estate planning, offering investors retained ownership, listed market exposure and potential full IHT exemption after two years, alongside ISA accessibility,” he continued.

“However, its characteristics have aligned more closely with capital growth than capital preservation, given its higher volatility and risk profile.

“That distinction has become more relevant following a prolonged period of weaker AIM performance.

“The reduction in relief from April 2026 further alters its value proposition, prompting advisers to question whether it continues to deliver the combination of growth potential and tax efficiency that originally attracted investment.”

Firms were therefore found to be reassessing existing portfolios and considering whether certain clients would be better off using alternative BR structures.

While Jones said that this does not signal the end of AIM within estate planning, as investors seeking liquidity, listed exposure, and long-term growth would still find them valuable within a broader strategy, advisers were increasingly recognising that BR solutions were not homogeneous.

“Different structures can offer varying levels of investment risk, liquidity and return expectations, making it important to assess which characteristics most closely align with a client's objectives and circumstances,” he explained.

“What’s changing is the idea that AIM should be the default starting point for BR planning.

“Advisers are increasingly segmenting clients more explicitly. For those prioritising growth and able to tolerate volatility, AIM may remain appropriate even with reduced relief.

“For clients focused on capital preservation and IHT mitigation, unquoted BR investments are attracting greater attention. Equally, advisers are paying closer attention to factors such as liquidity requirements, time horizon and overall risk tolerance, recognising that different BR approaches may be suitable for different client needs even where the tax outcome is similar.”

Replacement relief was one factor highlighted as supporting this shift, with relief being effectively reduced by 50 per cent in a two-year period before full relief is restored when moving between qualifying BR investments on a like-for-like basis.

Providers were found to be offering reduced or waived initial charges and transitional arrangements to attract assets moving out of AIM and/or BR, while BR planning was increasingly being seen as part of a wider wealth preservation and succession strategy, Jones said.

“Advisers are now balancing tax efficiency with investment risk, liquidity, income needs, control of assets and intergenerational objectives,” Jones stated.

“This reflects changing client priorities. Frozen tax thresholds, rising asset values and growing awareness of future IHT liabilities have made succession planning more central for many families.

“The April 2026 reforms are accelerating this trend and encouraging a more nuanced approach to suitability.

“Importantly, this is not simply a question of maximising tax relief. Unquoted BR investments bring considerations of their own, including lower liquidity and potential concentration risks.

“AIM, meanwhile, remains subject to market volatility and investment risk.

“Other BR strategies may sit at different points on the spectrum of risk, liquidity and return potential, reinforcing the need for advisers to understand the characteristics of each approach rather than viewing BR as a single asset class.

“Neither is inherently superior; suitability depends on client objectives.”

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