Business Relief
Benefit from IHT relief after two years (as long as shares are held at date of death) by investing in BR-qualifying companies
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Business Relief as an estate planning solution
Business Relief (formerly Business Property Relief or BPR) is an established tax relief that can help mitigate against inheritance tax. By investing (purchasing shares) in a company that qualifies for Business Relief, you could potentially reduce your Inheritance tax liability.
This is contingent on the type of business asset and how long you own the shares for. Shares in Business Relief-qualifying companies, if held for a minimum of two years, and at time of death, should be eligible for inheritance tax relief.
What relief does Business Relief offer?
The level of relief from the normal IHT rate (40%) will depend on the type of shares you own. Until April 2026, all BR-qualifying shares will be fully exempt from IHT.
After this date:
- Unlisted BR-qualifying shares will benefit from 100% IHT relief for the first £1 million and thereafter, IHT will apply at half the normal rate (20%).
- All AIM-listed BR-qualifying shares will benefit from IHT at half the normal rate (20%).
Please note: As these proposed reforms have not yet been drafted in legislation, they are subject to change.
BR qualifying companies you can invest in
You can be a minority owner shareholder in a business and benefit from Business Relief
Unlisted companies
Shares in UK-based unlisted companies, which are not traded on a public stock exchange, can qualify for Business Relief.
AIM-listed companies
Shares in AIM-listed companies (previously known as the Alternative Investment Market), can also qualify for Business Relief, while providing a unique opportunity to invest in smaller publicly listed companies.
Why use Business Relief as an estate planning solution?
Receive IHT relief after two years while maintaining control of your assets
Faster tax benefits
With a Business Relief-qualifying investments, investors' shares become eligible for IHT relief after just two years, as long as the shares are held at the time of death (subject to thresholds)
Greater control
Our Business Relief products allow investors to request access to their funds at any time, either in full or to provide an income. This is subject to liquidity and the terms of the product offer
Supporting UK business
By investing in Business Relief-qualifying companies, you are directly supporting UK businesses, often these companies are smaller or family-run enterprises
Downing’s estate planning solutions
Downing Estate Planning Service
The Downing Estate Planning Service aims to provide IHT relief after two years by investing in BR-qualifying businesses and targets steady returns of 3-4.5% each year. We invest in businesses that matter across our two strategies.
Downing AIM Estate Planning Service
The Downing AIM Estate Planning Service looks to provide IHT relief after two years through a diversified portfolio of companies that are listed on AIM (the Alternative Investment Market). We seek attractive investment opportunities in growth companies.
Downing AIM ISA
In the Downing AIM ISA, investments are held in an ISA wrapper for further tax benefits. We look to provide IHT relief after two years alongside investment growth by investing in a diversified portfolio of companies that are listed on AIM (previously the Alternative Investment Market).
Frequently Asked Questions on Business Relief
If you have any additional questions, please contact us.
The value of your estate that exceeds the below allowances will be subject to IHT at 40%.
The nil rate band (NRB) is currently £325,000 per person. This is the amount of value in your estate that can be passed on without paying IHT. Spouses and civil partners can transfer part or all their unused NRB to each other.
The residence nil rate band (RNRB) is £175,000. If you own a home, ownership can transfer to a direct descendant after your death. There are conditions for this threshold to be available.
Business Relief was introduced in 1976 to ensure small businesses wouldn’t have to be sold to pay IHT bills when an owner died. The tax relief since has been extended to include people who own shares in qualifying UK trading businesses.
This includes shares in unlisted companies that are not traded on a public stock exchange and in companies listed on AIM (the Alternative Investment Market). The level of IHT relief you benefit from will depend on the type of shares you own.
For you to benefit from Business Relief, you must have held the shares for at least two years at the date of your death.
Downing’s estate planning solutions offer investors the chance to invest in BR-qualifying assets, allowing them to get inheritance tax relief on their investments.
As with all investing there are various risks to consider before making an investment decision. Before you choose an estate planning solution, we recommend you seek financial advice.
Investment risks
The value of your investment can go down as well as up. Also, shares in smaller companies can be harder to sell and can be more volatile (the value may go up and down more) than larger companies quoted on a main stock exchange.
You cannot rely on the past performance of an investment to judge how successful it will be in the future.
BR and IHT relief risks
BR is possible if you hold qualifying shares for a minimum of two years and at death. However, BR is not guaranteed and is subject to thresholds. It is also dependent on the business continuing a qualifying trade.
Also, the companies within the service could lose their BR qualifying status if the BR rules change, which could result in an IHT liability on your investment.
Please note this is only a brief overview of the risks involved with investing in an estate planning solution. Please read full details of all the risks within the appropriate product literature before investing.
Business Relief operates independently of other inheritance tax allowances, potentially offering additional tax efficiency alongside the existing Nil Rate Band (NRB) and Residence Nil Rate Band (RNRB). This means Business Relief-qualifying investments don't affect your ability to use these allowances - they work in parallel rather than replacing them.
For example, if your estate benefits from the full NRB (£325,000) and RNRB (£175,000), adding Business Relief-qualifying investments could provide additional IHT mitigation above these thresholds. After the two-year qualifying period, these investments could be exempt from IHT, while allowing you to use other available reliefs and exemptions.
Remember that to maintain the benefits of multiple reliefs, careful planning is essential. The qualifying criteria for each relief need to be met independently, and professional advice should be sought to ensure your estate planning strategy is optimised for your specific circumstances.
How to invest
It is important that both advisers and investors understand our products thoroughly, paying attention to any risks involved before investing. Our dedicated team is always on hand to answer any questions you may have.
Find the right product
At Downing we are committed to ensuring our investors are matched with the right product for them and encourage them to read our product literature thoroughly to understand the risks. We recommend investors seek professional financial advice before investing.
Speak to an adviser
At Downing, we are not able to provide financial advice. Investors should consult their financial adviser before making any investment. A financial adviser can help you to plan properly towards your financial goals.
How to invest with Downing
When investors are ready to invest, they and their adviser should complete the appropriate application form, which will be found on the relevant product pages (see above).
£5.5 trillion will pass between generations over the next 30 years, and that wealth transfer is set to rise to £100 billion by 2025
Wealth Transfer in the UK, Kings Court Trust, 2017
We're here to help
If you are a financial adviser or discretionary fund manager, and you want to discuss our IHT products and solutions, call 020 7630 3319 or email us at sales@downing.co.uk
If you are a private investor call 020 7416 7780 or email customer@downing.co.uk