Financial advice and wealth management clients planning for inheritance tax (IHT) are increasing their use of business relief solutions in the build up to changes coming into effect from April.

Research from investment manager Downing showed that 76 per cent of advisers and wealth managers had seen an increase in the proportion of their clients using business relief solutions for IHT planning, including 8 per cent reporting a substantial increase.

Almost six in 10 (59 per cent) advisers estimated that between 20 per cent and 30 per cent of their clients planning for IHT use business relief, while 41 per cent put that proportion at between 10 per cent and 20 per cent.

From April 2026, unquoted business relief assets and agricultural relief assets will have an allowance of £1m, where assets will benefit from 100 per cent IHT relief, after which IHT will apply at half the normal rate (20 per cent).

Meanwhile, all AIM-listed business relief-qualifying shares will also be subject to IHT at half the normal rate (20 per cent).

Almost all (95 per cent) advisers and wealth managers planned to continue using AIM IHT products offering access to business relief after April 2026, according to Downing’s survey.

It also found that 83 per cent would consider a business relief product aiming to return an annual yield of 5 per cent to 7 per cent to investors.

Over three quarters (76 per cent) of respondents said their clients were making gifts from their surplus income as a way to potentially reduce IHT bills, while 52 per cent said clients were using trusts.

Around half (46 per cent) reported that clients were giving money to charity to cut potential IHT bills, while 42 per cent were putting life assurance policies in a trust.

Fewer than one in five (19 per cent) said clients were gifting lump sums as part of IHT planning.

“We are seeing strong demand from advisers for business relief solutions with last year’s Budget adding further momentum,” commented Downing head of retail sales, Mark Dunn.

“Substantial numbers of clients are using business relief as part of their IHT planning and that is likely to grow as more people focus on the possibility of their estate being subject to IHT in the future.

“With changes to business relief coming into effect from April next year, we are continually reviewing our offering to give advisers confidence that they can meet their clients’ evolving needs.”

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