6 April 2026 marks a significant milestone for Inheritance Tax (IHT) planning, with the most extensive reforms to Business Relief (BR) in more than a decade coming into force.  

These changes reshape how BR can be used as a planning tool, creating both new opportunities and areas that require renewed scrutiny from financial advisers.  

In a landscape where frozen thresholds, rising estate values and shifting regulation continue to drive more families into the IHT net, BR remains a vital part of effective estate planning.

In this article we explore how advisers can help their clients make informed decisions under the new BR regime.

This article is written by:

Rebecca Ward-Howes

Head of Product

What has changed?

A new £2.5 million unquoted BR allowance

The 2024 Autumn Budget introduced a new £2.5 million cap on assets qualifying for 100% Business Relief. Any unquoted BR-qualifying assets above this limit now receive 50% relief (an effective 20% IHT rate).  

The allowance is fully transferrable between spouses or civil partners, giving couples up to £5 million of assets eligible for 100% BR.

This is the first time an allowance has been introduced for BR and can be seen as a positive from a planning perspective - it gives advisers a familiar framework to work with when communicating with clients, much like the Nil Rate Bands.

AIM BR reduction from 100% to 50%

AIM-listed BR-qualifying shares now attract 50% relief instead of 100%, with an effective 20% IHT rate.

For any existing investors in an AIM BR solution, where IHT mitigation has been the primary driver behind an investment, it may be appropriate to revisit the advice with these clients.

However, clients will still benefit from a reduced rate of IHT alongside the other advantages of an AIM solution, and suitability remains key in determining whether AIM BR continues to be appropriate for their circumstances.

Frozen Nil-Rate Bands continue to pull more estates into IHT

The Nil Rate Band (NRB) has been fixed at £325,000 since 2009, while the Residence Nil-Rate Band (RNRB) has remained unchanged since its introduction. Successive governments, both Conservative and Labour, have extended the freeze to both bands - now frozen until 2031.  

With more than 15 years of inflation and rising asset values, particularly property, many more estates now exceed these IHT thresholds.

Pensions

From April 2027, unspent defined contribution pensions will also fall within the scope of IHT, capturing families who previously expected pensions to sit outside their estate planning considerations.  

This has a double impact for clients:

• Any pension assets over the available allowances will be taxed at 40%
• The inclusion of pensions could push the value of an estate over £2 million, therefore limiting access to the RNRB

What this means for advisers

Understand your client’s position and how it may change

The BR and IHT landscape are changing. Reliefs are shifting and planning that was established recently may no longer remain optimal.  

Advisers now have a critical role in helping clients understand:

• Their IHT liability following the changes
• How legislative changes could alter their overall estate planning needs
• If BR has already been used in estate planning, is it achieving optimal results for the client
• How the new BR allowance interacts with their existing arrangements
• Whether BR should be combined with other planning tools for resilience

Downing’s IHT Calculator has been created to help you model your clients’ IHT exposure quickly and clearly, including:

• available allowances (NRB & RNRB)
• RNRB taper for estates over £2 million
• inclusion of pensions from April 2027

The Calculator provides advisers with a transparent way to quantify the impact of advice, test planning assumptions and help clients understand complex changes with confidence.

Complex situations may require collaboration

BR can be a unique planning tool in a variety of client scenarios. Some scenarios may require advisers to collaborate with accountants or solicitors to ensure a holistic solution.

Examples include:

• Business owners: understanding whether the client’s company’s activities remain BR-qualifying, especially if it holds excepted assets such as surplus cash. Where BR has been lost, corporate BR solutions may help reinstate qualification.
• Trust planning: trusts face additional charges when investing over the NRB. However, unquoted BR assets are exempt: meaning up to £2.5 million can be placed into trust without triggering a Chargeable Lifetime Transfer fee. This allowance refreshes every seven years, creating an opportunity for long-term estate planning.
• Power of attorneys: POAs can be heavily restricted around what type of estate planning they can do. As BR is simply an investment, POAs are typically able to utilise BR.  

In this new landscape, advisers play a vital role in ensuring BR doesn't sit in isolation but instead supports a wider estate plan that remains robust and effective.

Greater need for suitability and due diligence

Regulatory changes mean advisers must not only demonstrate why BR is suitable as an estate planning tool, but also why the chosen provider and product meet Consumer Duty expectations.

BR services vary widely in:

• investment strategy
• governance
• asset mix
• manager level activity and oversight

At Downing, we provide independent, third-party reviews of our BR services to support adviser due diligence and documentation, these are available on request.

Why 6 April is a trigger point

Rebalancing portfolios

For clients with AIM based BR investments, the reduction from 100% to 50% relief means that their IHT exposure may have increased overnight.

This is a natural point for advisers to:

• reassess whether existing AIM BR holdings remain appropriate
• model the impact of rebalancing using an IHT calculator
• review existing wills and trusts in light of new rules

Finally, with pensions set to fall within the IHT net from April 2027, many clients will face a materially higher IHT liability than previously anticipated - making now the right time for advisers to be proactively reviewing IHT planning across the board.

Using Downing’s IHT Calculator to model the new rules

Our Calculator enables advisers to:

• consider available allowances to calculate an IHT liability  
• compare AIM BR and unquoted BR outcomes
• show the impact of the £2.5 million unquoted BR allowance  
• demonstrate the quantifiable value of advice

It supports advisers in breaking down complex regulation into clear client friendly scenarios.  

Strengthening the quality of conversations while helping to meet Consumer Duty obligations around understanding, clarity and evidence.

Why these changes reinforce the value of Business Relief

Despite reform, the core benefits of BR remain unchanged:

• clients retain ownership and access (subject to liquidity)
• the two-year qualification period is still one of the fastest routes to IHT mitigation
• BR integrates effectively with power of attorneys, trusts, gifts and intergenerational planning

BR continues to offer a combination of control, speed and flexibility that other estate planning solutions cannot easily replicate - particularly in the context of frozen thresholds and the 2027 pension changes.

How Downing supports you

Downing is a specialist in estate planning, offering a suite of BR-qualifying services designed to meet the evolving needs of advisers and their clients.  

The April 2026 reforms present both challenges and opportunities. Advisers who act proactively - reviewing suitability, optimising relief and helping clients understand the changing landscape - can deliver exceptional long-term value.

Our team is here to support you with IHT calculations, technical queries and deeper estate planning conversations as the new BR environment begins to bed in.

If you’d like to discuss how these changes affect your clients, we’re here to help.