A shifting landscape for Inheritance Tax

Frozen allowances

Inheritance tax (IHT) receipts reached a record £8.3 billion in 2024/25 and are forecast to rise to £9.1 billion in 2025/26,  climbing further to £14.3 billion by 2029/30.  With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until at least 2030, more estates are being drawn into the IHT net as the value of property and investments climb.

Pension reform driving demand

The 2024 Budget brought pensions into the IHT net from April 2027, triggering a surge in estate planning activity.

Downing’s recent survey of 100 UK financial advisers and wealth managers found that:

Once considered ‘deathbed planning,’ Business Relief (BR) is now a core component of earlier, more strategic estate planning conversations. With longer investment horizons and a greater appetite for risk, younger clients are increasingly seeking growth-oriented IHT solutions.

Industry innovation across IHT is being driven by the inclusion of pensions within estates: a view shared by 94% of financial advisers surveyed.

Why Downing launched the Growth Estate Planning Service

In response to this evolving landscape, Downing has launched the Downing Growth Estate Planning Service, a Business Relief (BR)-qualifying investment targeting 5–7% per annum (net of Downing ongoing fees) designed to offer IHT relief after just two years (if held at death).

This service directly addresses adviser demand for growth-focused BR solutions: with 29% of advisers stating the current UK BR product range is too narrow and 12% specifically seeking more growth potential.

Key features of the service

➤ Speed of IHT relief

Investments should benefit from IHT relief after two years (as long as the shares are held at the time of death).

➤ Growth focus ‍

The Service targets returns of 5-7% p.a. (net of Downing ongoing fees).

➤ Wealth Guard cover

Unique to Downing, this feature covers a fall in value of up to 20% of the net initial investment (i.e. the amount invested after charges up to £750,000) on exiting the investment following death at no extra cost. ‍

➤ Existing diversified portfolio

Clients’ funds will be deployed into an existing portfolio of asset-backed businesses, which are in needs-based businesses (in sectors such as healthcare, housing and education).

➤ Liquidity and flexibility ‍

Investors can request to sell shares anytime or set up regular withdrawals. Downing aims to provide access every two weeks, subject to liquidity.*

Want to find out more about the Downing Growth Estate Planning Service?

In this introductory webinar, Jake Kelly, Sales Director and Mark Gross, Investment Partner explain why we launched the Downing Growth Estate Planning Service to complement our existing suite of estate planning solutions.

Watch here

A Business Relief solution for every client

The Downing Growth Estate Planning Service complements Downing’s broader suite of estate planning solutions, enabling advisers to tailor strategies to client needs and time horizons:

Downing Estate Planning Service targets capital preservation through steady annual returns of 3–4.5% p.a. (net of Downing ongoing fees) through investments in asset-backed businesses as well as renewable energy and infrastructure. The portfolio includes over 9,000 assets across 14 sectors.

Downing Growth Estate Planning Service targets growth-focused annual returns of 5-7% p.a. (net of Downing ongoing fees) through investments in asset-backed needs-based businesses, such as healthcare, housing and education. The illustrative portfolio includes 111 assets across seven sectors.

Downing AIM Estate Planning Service seeks attractive opportunities in AIM-listed businesses that the manager believes have strong potential for growth. The portfolio includes 25–40 companies across a variety of sectors and is available in an ISA wrapper.

By expanding the range of BR services, Downing empowers advisers to build bespoke, forward-looking strategies that align with their clients’ long-term goals. Offering advisers the flexibility to match strategies to life stage and objectives – much like pension planning. 

Whether used alone or in combination with other Downing services, this new BR service helps advisers stay ahead of regulatory change: delivering value today and for generations to come.

*The Downing Growth Estate Planning Service invests in shares of unquoted companies that are not listed on any stock exchange. This means that the shares we invest in may take longer to sell than shares of companies listed on the London Stock Exchange.

Important notice

This document has been prepared for investment professionals and has been approved and issued as a financial promotion by Downing LLP. We recommend investors seek professional advice before deciding to invest. Tax treatment is dependent on the individual circumstances of each investor and may be subject to change in the future. Downing is a trading name of Downing LLP. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England and Wales (No. OC341575). Registered Office: 10 Lower Thames Street, London EC3R 6AF.