Inheritance tax (IHT) has become a bigger concern for many families across the UK, with estates above available allowances facing a potential 40% charge. Against that backdrop, Business Relief (BR) has long been an important estate planning tool.
From April 2026, however, the rules have changed. While BR will remain an important tool for IHT mitigation, the new rules mean it can no longer be viewed as a standalone solution. For investors, advisers and BR solution providers, the focus now shifts from simply accessing the relief to understanding how much relief may be available, where it applies, and how it fits within an individual's broader planning strategy.
What is Business Relief?
Business Relief is a UK inheritance tax relief that reduces the taxable value of certain qualifying business assets.
Historically, qualifying assets could receive up to 100% relief once held for a minimum of two years, provided they continue to qualify at the time of death. (The two-year holding requirement remains under the new rules).
Over time, BR has become more widely used within estate planning, particularly through managed investment solutions that give investors access to qualifying assets without the need to hold them directly. The original purpose of the relief was to avoid the forced sale of business assets to meet inheritance tax liabilities.
What is changing in April 2026?
From 6 April 2026, limits now apply to how much BR can be claimed at the full 100% rate.
What you need to know:
- For estates that include qualifying Business Relief assets, 100% relief applies up to £2.5 million, covering both qualifying BR and Agricultural Property Relief (APR) assets combined. 50% relief will generally apply for assets above this threshold.
- Any unused allowance can pass to a surviving spouse or civil partner, meaning up to £5 million may qualify across a couple.
- Certain shares designated as “not listed” on a recognised stock exchange (including AIM-listed shares) now qualify for 50% relief from April 2026 onwards.
- As we have been covering the emerging Private Intermittent Securities and Capital Exchange System (PISCES) for secondaries (see prior blogs such as PISCES Explained: What the UK's new private market could mean for investors), it is interesting to note that shares traded on PISCES are expected to qualify for 100% Business Relief, subject to confirmation in final legislation.
Tax treatment depends on individual circumstances and may be subject to change.
What this means in practice
For many investors, the headline change is the introduction of a cap on full IHT relief.
In practice, the impact depends on how much of an estate is allocated to BR-qualifying assets. For those below the £2.5 million threshold (or £5 million for a couple), the position may not change materially. But for larger estates, the new rules have made estate planning more complex. Part of the estate may still benefit from full IHT relief, but anything above the new threshold is likely to only receive partial relief.
The key change is that BR can no longer be relied upon as a standalone solution. Planning now focuses on how much of an estate is allocated to BR-qualifying assets, given that only part of that allocation may benefit from full relief, rather than simply whether assets qualify. In practice, this means deciding how to allocate capital across BR and other planning strategies to maximise overall tax efficiency, as the benefit of BR now varies depending on how much has already been used.
Implications for BR solution providers
What these changes mean for BR solution providers:
- Providing clearer guidance on expected outcomes, including how relief may be split between 100% and 50% levels.
- Placing greater weight on portfolio construction, particularly where only part of an allocation benefits from full relief.
- Helping both advisers and investors understand the relationship between investment risk and potential tax benefit.
Implications for investors and advisers
For investors and advisers, BR is still likely to have an important role, but expectations may need to adjust.
What these changes mean for investors and advisers:
- Reviewing how much of an estate is exposed above the £2.5 million threshold.
- Considering how BR fits alongside other approaches such as gifting, trusts or insurance.
- Being clear on timelines, as qualifying for BR still depends on holding assets for at least two years and maintaining eligibility.
Where BR investment solutions still fit
For investors who do not hold qualifying business assets directly, professionally managed BR portfolios can still offer access to investments intended to qualify for the relief.
Even where the level of relief is lower, these solutions may continue to form part of a wider estate planning strategy, particularly for investors who want to retain flexibility and control over their capital.
Key Takeaway
Business Relief is expected to play an important role in estate planning, but from April 2026 its value will depend less on simple eligibility and more on how it is applied in practice.
For many investors, it will remain a key consideration to their estate planning. The difference is that it now requires more precise consideration and a clearer understanding of outcomes.
Rather than being viewed in isolation, BR is increasingly being considered alongside other strategies, with its role depending on the size and structure of each estate.
Following these changes, the question is no longer simply whether investors should consider BR, but how it can be used effectively as part of a wider estate planning approach.
Useful Links
1. UK Government (2026) Agricultural property relief and business property relief changes.
Important Information
This article is for information purposes only and does not constitute investment, tax or legal advice. Investors should seek independent professional advice before making any investment or estate planning decision.
Business Relief is not guaranteed. Its availability depends on the qualifying status of the investment, the length of time it is held, and the investor’s individual circumstances. Tax rules can change, and relief may not be available in the future or at the time it is needed.
Investments used for Business Relief planning are high risk. They are often invested in unlisted or AIM-traded companies, which may be more volatile, less liquid, and harder to sell than exchange-traded companies. The value of investments can fall as well as rise, and investors may get back less than they originally invested.
Tax treatment depends on individual circumstances and may change in the future.
