Business Relief: A Powerful Estate Planning Tool

Business Relief (BR) is a valuable Inheritance Tax relief available under current UK tax legislation. It allows qualifying business assets to be passed on free from Inheritance Tax, or with a reduced liability, subject to meeting specific conditions.

This relief represents one of the most significant estate planning opportunities available to UK taxpayers, potentially eliminating up to 100% of the Inheritance Tax liability on qualifying investments.

Qualifying Conditions

  • Shares must be in unlisted trading companies for maximum relief

  • Minimum holding period of two years before death, and at death

  • Company must not be mainly involved in investment activities

  • Must not be dealing in securities, stocks, shares, land, or buildings

Relief Benefits

Qualifying unlisted trading company shares may receive up to 100% relief from Inheritance Tax, potentially eliminating IHT liability on those assets entirely. Relief applies at death, not on lifetime transfers, meaning investors retain ownership and control during their lifetime.

Retain control of your assets (Vs Gifting / trusts)

Speed - only 2 years before exempt from IHT

Flexibility - can increase investments over time

Why Inheritance Tax Planning Matters

Inheritance Tax receipts in the United Kingdom have reached record highs in recent years, driven primarily by frozen nil-rate bands and rising property values. The nil-rate band has remained at £325,000 since 2009, whilst the residence nil-rate band of £175,000 has been frozen since 2017. These thresholds are now set to remain frozen until at least 2030.

£7bn +

Annual IHT Receipts

Record tax collection achieved in the 2023/24 tax year, representing unprecedented levels of Inheritance Tax revenue for HMRC

40%

Standard IHT Rate

Applied to estates above the nil-rate band threshold, one of the highest rates of tax on asset transfers

2030

Threshold Freeze Until

Government commitment to maintain frozen allowances through 2030, ensuring more estates face IHT liability

The combination of frozen thresholds, rising property values, and increasing wealth concentration means that Inheritance Tax is no longer solely a concern for the very wealthy. Middle-class families with modest property holdings and pension savings are increasingly finding themselves facing significant tax bills.