Business Relief (BR) has been part of the UK inheritance tax (IHT) framework for decades. It was originally introduced to prevent family businesses being forced into a sale to fund an IHT bill, but over time it has become increasingly relevant in wider estate planning as more clients are pulled into scope by rising asset values and frozen thresholds.

That landscape is now shifting. From 6 April 2026, the government will introduce reforms that limit the amount on which one could claim up to 100% relief, adjust how excess value is treated, and change the relative position of certain qualifying assets. The relief itself remains, but its use will require more deliberate structuring within an estate.

This article sets out the key changes, explains why they matter, and highlights the planning considerations advisers may want to address ahead of the new tax year.

Why Business Relief has mattered to advisers

For investors comfortable with the higher risk profile, BR has become valuable not simply because it reduces IHT, but because of how it does so.

Unlike gifting strategies, it does not require clients to live for a further seven years after the transfer is made. Unlike many trust structures, it does not involve surrendering ownership of the assets. Provided the qualifying conditions are met and assets are held for two years, relief can apply while the client retains ownership.

The combination of a shorter two-year qualifying period and the ability for investors to retain ownership of assets has meant that BR is often considered in estate planning discussions, particularly where clients wish to preserve access to capital or are reviewing arrangements later in life when certain longer-term strategies may be less suitable.

For advisers, it has therefore operated as both a defensive and proactive tool within estate planning, capable of sitting alongside other structures while addressing a defined portion of an IHT liability.

The key changes from April 2026

From 6 April 2026, BR will move from being an uncapped relief to one with defined limits and clearer boundaries. While the relief remains in place, the way it applies will change in four key areas.

1. A £2.5m cap on 100% relief

Each individual will be able to claim 100% BR on up to £2.5m of qualifying assets, with the allowance applying across both BR and Agricultural Property Relief (APR) combined.

This is a significant shift from the current position, where there is no monetary ceiling and where substantial estates have been able to mitigate large IHT liabilities through BR-qualifying assets alone.

2. 50% relief above the cap

Any qualifying assets above the £2.5m threshold will receive 50% relief, resulting in an effective inheritance tax rate of 20% on the excess.

Relief therefore remains meaningful, but it becomes partial rather than absolute once the cap is exceeded, which will change how advisers approach allocation within an estate.

3. Transferability between spouses

Unused BR allowance will be transferable between spouses and civil partners, broadly mirroring the treatment of the nil-rate band.

In practice, this means a surviving spouse could potentially access up to £5m of 100% relief, creating additional planning opportunities for couples, widows and widowers.

4. AIM shares treated less favourably

AIM-listed shares will qualify only for 50% relief and will not count towards the £2.5m allowance for 100% relief.

This distinction is likely to prompt a reassessment of AIM-based strategies, particularly where AIM exposure has been used as a core part of inheritance tax planning.

Taken together, these reforms do not remove BR from the estate planning toolkit, but they do change how it needs to be used.

What this means for advisers in practice

For many clients, BR has historically been used in a relatively straightforward way, whether through ownership of trading businesses, AIM portfolios, or unquoted investments held specifically for IHT planning. From April 2026, the introduction of a £2.5m cap on 100% relief is likely to force a reassessment of that approach, particularly for clients with larger estates or significant existing BR exposure.

The reforms make BR less of an open-ended planning tool and more of a targeted allocation decision, where advisers will need to consider how much of a client’s estate should sit within BR-qualifying assets, and which assets are best suited to sit within the 100% relief allowance.

This is also likely to increase the relevance of professionally managed BR solutions, particularly where clients want exposure to qualifying assets without relying on concentrated single-company risk or unmanaged portfolios. A structured approach can support diversification, governance, and ongoing monitoring, which becomes increasingly important as BR moves into a more capped and deliberate framework.

Solutions such as the ProVen Estate Planning Service (PEPS) are designed to provide access to BR-qualifying assets through a discretionary managed portfolio investing across multiple unquoted UK trading companies, giving advisers a practical route for implementation within a wider estate planning strategy. It should be noted that eligibility for BR is not guaranteed and depends on the underlying companies in the PEPS maintaining their BR-qualifying status at the time of claim, as well as on prevailing tax legislation and individual circumstances.

Why advisers should act ahead of April 2026

Although the reforms will take effect from April 2026, advisers should be having these conversations well in advance.

Business Relief remains subject to the two-year qualifying period. This timing requirement is likely to be a relevant consideration when reviewing existing arrangements or assessing future planning options ahead of April 2026. Advisers may therefore wish to factor the qualifying period into any broader estate planning discussions.

For advisers, this is an opportunity to identify clients who may be affected by the new cap and help them take a more deliberate approach before the new framework comes into force.

If you would like to discuss how these changes may affect your clients, please contact us on 020 7845 7820 or info@beringea.co.uk.

The explanation the tax rules set out in this article have been written in accordance with our understanding of the law and interpretation of it at the time of publication. It is not our intention to offer legal, tax or investment advice, and we always recommend that investors seek professional advice that can take account of their personal circumstances before making any investment or estate planning decisions.

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