Business Relief: The estate planning tool worth knowing about

Individuals now have a £2.5 million allowance for 100% relief on qualifying business and agricultural property, up from the £1 million figure originally proposed in October 2024 and increased following the government’s December 2025 announcement. Anything above that threshold still receives 50% relief, meaning an effective inheritance tax rate of 20% rather than the standard 40%. That allowance is also transferable between spouses and civil partners, so a married couple can potentially pass on up to £5 million in qualifying assets before paying inheritance tax on them at all.

For most people, in other words, Business Relief remains fully intact. It just requires understanding what actually changed rather than assuming the worst from a headline.

If you’re exploring this area, you’ll typically come across two routes: AIM-listed shares and private company equity investments. Both sit within the Business Relief universe, but they behave very differently, and it’s worth understanding the difference rather than treating them as interchangeable.

AIM shares changed materially in April 2026 too. Relief on AIM holdings is now capped at 50% regardless of value, and unlike direct business or private company holdings, they don’t benefit from the £2.5 million allowance at all. AIM shares also carry the liquidity and volatility characteristics of a public, smaller-company market, which can be considerable, prices can move sharply, and you’re exposed to the same swings as any other listed share.

Private company equity investments, by contrast, including shares in unquoted trading companies, can qualify for 100% relief within the allowance, provided they meet the two-year qualifying holding period and the underlying business meets HMRC’s “wholly or mainly trading” test. The trade-off is different too: these investments are illiquid, harder to value day to day, and carry the operational and business risk of the underlying company or companies. There’s no daily share price to reassure or alarm you, which some investors find more comfortable, and others find harder to assess without that visible marker.

Neither route is inherently better than the other. They suit different circumstances and different attitudes to risk, which is exactly why this is worth a proper conversation with a qualified financial adviser.

None of this is a reason to rush into Business Relief-qualifying investments without care. These remain higher-risk investments. Capital is at risk, and there’s no guarantee of any return. Business Relief itself isn’t guaranteed, it depends on the qualifying status of the underlying investment being maintained, on the two-year holding period being met, and on rules and regulations that can and do change, as we’ve just seen. Past performance is never a reliable guide to future performance.

What I’d want you to take away from this isn’t a recommendation, it’s an update. The rules changed, but the relief didn’t disappear, and for many people it remains one of the most significant and under-used tools available for estate planning. Whether it’s right for your circumstances is a different question entirely, and one worth exploring properly with a qualified adviser rather than deciding based on last year’s headlines.