Clients planning for inheritance tax (IHT) are increasingly turning to Business Relief (BR) solutions ahead of changes coming into effect from next April, new research from investment manager Downing shows.
In Downing’s survey of UK financial advisers and wealth managers, 76% reported a rise in the proportion of their clients using BR solutions for IHT planning, including 8% reporting a substantial increase.
Currently nearly six out of ten (59%) of advisers estimate between 20% and 30% of their clients planning for IHT use BR, while just over two out of five (41%) put that proportion at between 10% and 20%.
In last year’s Budget, the Chancellor announced plans to reform the IHT available on BR. From April 2026, unquoted BR assets and Agricultural Relief assets will benefit from a £1 million allowance, where the assets will benefit from 100% IHT relief and thereafter, IHT will apply at half the normal rate (20%). All AIM-listed BR-qualifying shares will benefit from IHT at half the normal rate (20%).
The study from Downing found almost all (95%) of advisers surveyed say they will continue to use AIM IHT products offering access to BR after April 2026.
More than four out of five (83%) said they could consider a BR product aiming to return an annual yield of 5% to 7% to investors.
Downing’s survey found that three out of four (76%) of advisers say clients are making gifts from their surplus income as a way to cut potential IHT bills, while more than half (52%) say clients are using trusts.
Just less than half (46%) say clients are giving money to charity in order to reduce potential IHT bills, while 42% are putting life assurance policies in a trust. Just one in five (19%) say clients are gifting lump sums as part of IHT planning.
Mark Dunn, Head of Retail Sales at Downing says:
“We are seeing strong demand from advisers for Business Relief solutions with last year’s Budget adding further momentum.
“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.”
Downing has a suite of estate planning solutions, depending on the client’s situation and investment preferences. The company recently launched the Downing Growth Estate Planning Service which aims to provide IHT relief after two years, if held at the date of death, and targets returns of 5% to 7% p.a. The Service could be attractive to younger investors with a longer investment horizon, who, following the Pension Reforms announced in last year’s Budget, will now potentially face an IHT liability.
The service offers higher-return potential within BR-qualifying asset-backed businesses, managed by an experienced investment team. For more information go to Inheritance Tax Solutions – Specialist IHT Products | Downing
