Originally published: IFA Magazine, 8 January 2026
The pace of change in inheritance planning is accelerating, with advisers having to adapt quickly and efficiently to massive upheaval and uncertainty.
From April next year, the rules on unquoted Business Relief (BR) and Agricultural Relief (AR) assets are changing. Currently, both benefit from unlimited Inheritance Tax (IHT) relief, however, from the 2026/27 tax year there will be a £2.5 million allowance for the combined value of assets. On the first £2.5 million of assets, the 100% relief still applies. For any qualifying unquoted BR or AR assets above that £2.5 million allowance, the rate of relief will be halved – so, for the assets over the allowance an effective IHT rate of 20% will apply. For shares listed on the Alternative Investment Market (AIM), the BR rate will be 50% in all cases, attracting IHT at 20%.
That is a big enough change to merit the Government giving advisers 18 months to adapt, as the measures were announced in the 2024 Autumn Budget.
It is not however the only upheaval in IHT planning – from April 2027 unused defined contribution pension funds will be included in estates and subject to IHT. Alongside the legislative changes, IHT receipts continue to rise, hitting a record £8.2 billion in 2024/25 amid forecasts receipts will be £14.3 billion by 2029/30*
Fundamentally changing the landscape
The inclusion of unused pensions within estates coupled with the changes to BR and AR is fundamentally reshaping the inheritance planning landscape, forcing both advisers and clients to rethink how they balance long-term income needs with intergenerational wealth transfer.
The policy changes are driving a wave of innovation in IHT solutions, as the changes mean the situation has reversed: pension pots can no longer be relied on for estate planning. Advisers now need to find ways to mitigate IHT while ensuring clients maintain sufficient retirement income, which requires a complete rethink of traditional estate planning strategies.
We are seeing strong demand from advisers for BR solutions, with the 2024 Budget adding further momentum. Substantial numbers of clients are already using BR as part of their IHT planning, and that is likely to grow as more people focus on the possibility of their estate being subject to IHT in the future.
With the BR changes taking effect next April, at Downing, we’re not just reviewing our estate planning solutions – we’re adapting them. Advisers need practical, reliable options that support investor goals and provide confidence in delivering positive outcomes.
Fundamentally changing behaviour
We recently commissioned independent research with 100 UK financial advisers and wealth managers, and some results were concerning. Our research** found nearly half (47%) say clients are already cutting pension contributions to invest in IHT solutions ahead of the 2027 deadline. Around 75% say clients are increasing the amount of income they take from pensions in response to the new measures.
Nearly half (47%) are taking money to give as gifts or cutting pension contributions. Nearly two out of five (36%) are switching from making pension contributions to investing in property.
It goes wider – the survey found 75% of advisers may need to adapt their current IHT planning for between 20% and 30% of their client base in response to the inclusion of pensions in estates. More than six out of ten (61%) estimate there will be a 15% or more increase in the percentage of their client base facing a potential IHT liability as a result of the decision.
The changing role of Business Relief
More than three out of four advisers (76%) we spoke to have reported a rise in the proportion of their clients using BR solutions for IHT planning, including 8% reporting a substantial increase.
Currently, nearly six out of ten (59%) of advisers estimate between 20% and 30% of their clients planning for IHT use BR, while just over two out of five (41%) put that proportion at between 10% and 20%.
Our study found almost all (95%) of advisers surveyed say they will continue to use AIM IHT products offering access to BR after April 2026. More than four out of five (83%) said they would consider a higher growth BR product. In addition to using BR, 76% of advisers say clients are making gifts from their surplus income as a way to cut potential IHT bills, while more than half (52%) say clients are using trusts. Just less than half (46%) say clients are giving money to charity in order to reduce potential IHT bills, while 42% are putting life assurance policies in a trust. Just one in five (19%) say clients are gifting lump sums as part of IHT planning.
*Inheritance tax – Office for Budget Responsibility
** Downing commissioned independent research company Pureprofile to interview 100 UK financial advisers and wealth managers using an online methodology during August 2025
