Nick Jones, Head of Business Development at Ingenious, assesses how the April 2026 reforms to Business Relief (BR) are prompting advisers to reassess inheritance tax planning, particularly the role of AIM investments.
The forthcoming changes to BR from April 2026 are prompting advisers to reassess how inheritance tax (IHT) planning is structured. While attention has largely focused on the reduction in relief available on AIM shares, the reforms are also accelerating a broader shift already underway in how BR strategies are used.
Historically, advisers have tended to deploy two distinct BR approaches depending on client objectives. AIM portfolios have typically been used as capital growth strategies, appealing to younger estate planning clients comfortable with investment risk and seeking long-term capital growth alongside potential IHT mitigation.
By contrast, unquoted BR-qualifying investments have more often been positioned as capital preservation tools, used by older clients prioritising wealth protection That distinction is becoming increasingly important.
The Autumn 2024 Budget confirmed that from April 2026, AIM-listed BR-qualifying shares will attract only 50% IHT relief, leaving investors exposed to an effective 20% charge on qualifying AIM assets. A new £2.5 million per-person allowance for Business Relief and Agricultural Property Relief will also apply, with assets above this threshold receiving reduced relief. The allowance will be transferable between spouses and civil partners.
These changes reinforce the need for advisers to focus on the underlying purpose of BR strategies, rather than treating 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. 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.
As a result, firms are reassessing existing portfolios and considering whether some clients would be better served by alternative BR structures. This does not signal the end of AIM within estate planning. For investors seeking liquidity, listed exposure and long-term growth, it may still play a valuable role within a broader strategy.
At the same time, advisers are increasingly recognising that BR solutions are 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. 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.
One factor supporting this shift is replacement relief. Historically, once assets had satisfied the two-year qualifying period, investors could move between qualifying BR investments on a like-for-like basis without losing full relief, meaning there was no effective risk of restarting the qualifying clock.
From April 2026, however, while replacement relief still applies, its mechanics are adjusted: relief is effectively reduced by 50% during the two-year qualification period before full relief is restored. This changes the dynamics of transitioning between AIM and unquoted BR investments and is prompting advisers to revisit portfolio construction
For example, a client holding £100,000 in a qualifying AIM portfolio from April 2026 would face exposure of around £20,000 in IHT on death, given the 50% relief. By contrast, transferring into a qualifying unquoted BR investment could, subject to meeting the relevant conditions, allow the asset to continue to benefit from Business Relief treatment through replacement relief, with full relief potentially restored once the two-year qualifying period has been satisfied.
Providers have responded quickly, with many offering reduced or waived initial charges and transitional arrangements to attract assets moving out of AIM/BR. This reflects both competitive dynamics and a broader shift in adviser behaviour ahead of the new regime. More fundamentally, BR planning is increasingly being viewed as part of a wider wealth preservation and succession strategy, rather than a standalone tax wrapper. Advisers are now balancing tax efficiency with investment risk, liquidity, income needs, control of assets and intergenerational objectives.
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.
Ultimately, the reforms encourage a return to first principles: is the client seeking growth, capital preservation, liquidity, income, full IHT mitigation, or continued control of assets? What level of investment risk are they comfortable taking and over how long. How readily might they need access to their capital? The answer will often vary not only between clients but across different stages of retirement.
April 2026 may therefore represent more than a technical change to tax treatment. It could mark a broader repositioning of Business Relief within financial planning, with greater emphasis on matching strategy to client need. For advisers willing to engage with that complexity, the result may be a more targeted and sophisticated planning landscape.
