Advisers are predicting growing demand for Business Relief solutions from clients planning for Inheritance Tax (IHT) after pre-Budget speculation persuaded some to ditch their existing plans, our new research* shows.

Growing demand for Business Relief in IHT planning

Our study with advisers and wealth managers found 81% expect the proportion of clients using Business Relief for IHT planning to rise, including 10% predicting a substantial rise in the numbers using Business Relief.

The predictions of growth come after speculation before October’s Budget that Business Relief could be scrapped completely. The research found that 14% of advisers had seen substantial number of clients pull out of schemes and a further 73% had seen some clients abandoning Business Relief schemes they were invested in. Just 12% said speculation had no impact on clients.

October’s Budget changed the 100% Business Relief currently available from 2026 so that 20% IHT is paid on the first £1 million of qualifying business and agricultural assets, plus the current nil rate band worth up to £500,000 per individual.

Our research found 59% of advisers estimate that up to 20% of their clients planning for IHT use Business Relief schemes with a further third (33%) estimating that between 20% and 30% of their IHT planning clients use Business Relief.

The research shows most advisers split the number of providers they use when advising on Business Relief solutions. Just 20% use only one provider while 64% use two and 13% split across three or more.

Mark Dunn, Head of Retail Sales at Downing says: “The Budget decisively ended the uncertainty over Business Relief enabling advisers and providers to plan for the future.

Business Relief plays an important role in helping growing businesses to access funding while also enabling people to plan for any IHT liabilities they may have.

Speculation before the Budget that Business Relief could be scrapped entirely had a major impact as demonstrated by the research showing that advisers saw some clients pulling out of schemes, they had invested in.”

Downing’s Business Relief solutions for IHT planning

Downing’s IHT planning solutions aim to provide full IHT relief after two years if held at the date of death by giving investors the opportunity to invest in Business Relief-qualifying businesses and companies listed on the Alternative Investment Market (AIM).

Downing Estate Planning Service invests predominantly in asset-backed trading businesses such as care homes and renewable energy and infrastructure. The Downing AIM Estate Planning Service invests in a diversified portfolio of 25 to 40 companies that are listed on AIM, and is also offered in an ISA wrapper.

Visit our inheritance tax solutions for more information.

Source:

*Downing commissioned independent research company PureProfile to interview 100 UK financial advisers and wealth managers using an online methodology during November 2024.

Important notice

‍Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.

Important notice: This article is for investment professionals only. This article is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.

This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.

Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.