Help Sheet - Estate planning documents

Business Relief Trust Wills

For business owners and investors who hold assets qualifying for Business Relief, how those assets are dealt with in a Will requires careful thought. A Business Relief Trust Will is designed to preserve the tax advantages that Business Relief provides while adding the protection of a trust — ensuring that qualifying assets reach the right people, in the right way, without unnecessary tax exposure or the risks that come with an outright inheritance.

Note on recent changes: Business Relief rules are changing from April 2026 following the Autumn 2024 Budget. These changes are significant and affect how BR is calculated for larger estates. This page reflects the current position as we understand it, but the rules are in transition — if this is relevant to your estate, please get in touch so we can discuss your specific position in the context of the current legislation.

What Business Relief is

Business Relief — previously known as Business Property Relief — is a long-standing IHT relief that reduces the taxable value of certain qualifying business assets on death. Where it applies at 100%, the asset is effectively removed from the estate for IHT purposes entirely. Where it applies at 50%, half the value is exempt. The relief exists to prevent the forced sale of businesses and qualifying assets to meet an IHT bill — recognising that businesses are often illiquid assets that can't simply be part-sold to pay a tax charge.

To qualify, assets generally need to have been owned for a minimum of two years before death, and must meet the relevant qualifying conditions at the date of death. The nature of the asset and how it's held both matter — and the rules are specific enough that taking proper advice is essential.

What qualifies for Business Relief

• 100% relief

  • A sole trader business or partnership interest in a qualifying trading business. Unquoted shares in a qualifying company — including shares listed on AIM, which are treated as unquoted for BR purposes, provided they've been held for at least two years. Unquoted securities that give the holder control of a company.

• 50% relief

  • Quoted shares or securities that give the holder control of a company. Land, buildings, or machinery owned personally by a controlling shareholder and used in the business. Assets used in a business held in a trust of which the deceased was a beneficiary.

• What doesn't qualify

  • Not all businesses qualify. Businesses that consist wholly or mainly of dealing in securities, land, or buildings — or that make or hold investments — are specifically excluded. Property investment companies, for example, do not generally qualify for Business Relief, even if they're structured as trading companies. The qualifying conditions need to be checked carefully for each asset and each business.

The April 2026 changes — what's happening

The Autumn 2024 Budget announced significant changes to Business Relief, which came into force on 6 April 2026. The original announcement proposed a cap of £1,000,000 on 100% relief — but following substantial pushback from the farming and business communities, the government increased this to £2,500,000 per person before the legislation came into force.

From 6 April 2026, the 100% relief is capped at £2,500,000 per person, applied across the combined value of Business Relief and Agricultural Property Relief qualifying assets. Assets above this threshold receive 50% relief rather than 100% — meaning an effective IHT rate of 20% on the excess, rather than 0%. Any unused allowance can be transferred to a surviving spouse or civil partner, even where the first death occurred before 6 April 2026.

For those with qualifying assets below £2,500,000, the changes may make little practical difference. For those with substantial business interests above this threshold, the impact can be significant — and the planning review is now urgent rather than optional.

AIM shares — a separate and important change

AIM-listed shares are treated differently from other BR-qualifying assets under the new rules, and this is a point that catches many investors by surprise. From 6 April 2026, AIM shares no longer qualify for 100% relief at all — they now receive only 50% relief, and the £2,500,000 allowance does not apply to them. This means AIM portfolios held specifically for BR purposes are now exposed to a 20% effective IHT rate on their full value, regardless of size. For investors who structured their portfolios around the expectation of 100% BR, this is a material change that requires both an investment review and an estate planning review.

Trusts — their own allowance

Relevant property trusts — including discretionary trusts used in Business Relief Trust Wills — have their own £2,500,000 100% relief allowance, separate from the individual's personal allowance. This allowance refreshes every ten years, aligned with the periodic charge cycle. Exit charges from the trust are calculated on unrelieved values. Anti-fragmentation rules apply to trusts created after 30 October 2024, meaning the allowance is divided between multiple trusts created by the same settlor after that date rather than each trust having its own full allowance — an important consideration for anyone who has set up or is considering setting up multiple trusts.

Why a trust matters alongside Business Relief

Business Relief removes or reduces the IHT exposure on qualifying assets — but it doesn't protect those assets from the other risks that come with an outright inheritance. A beneficiary who inherits qualifying business assets or an AIM portfolio directly owns them outright, with no protection around them. If that beneficiary goes through a divorce, faces creditors, or needs care, the assets are exposed. If they die and leave those assets to a new partner, the assets may leave the family bloodline entirely.

A Business Relief Trust Will addresses this by directing qualifying assets into a discretionary trust on death, rather than passing them outright. The assets still benefit from Business Relief — the trust doesn't remove that — but the trust adds a layer of control and protection over what happens to them afterwards. Trustees manage the assets in accordance with the trust deed and guided by a letter of wishes, deciding how and when beneficiaries benefit, and ensuring the assets remain protected from third-party claims.

How it works in practice

• Identifying qualifying assets

  • The starting point is identifying which assets in the estate qualify for Business Relief, at what rate, and whether they're likely to still qualify at the date of death. Business circumstances change — a business that qualifies today may not qualify in future if its nature changes, if it becomes predominantly investment-based, or if the ownership structure shifts. Regular review is important.

• Structuring the Will

  • The Will directs qualifying assets into a discretionary trust on death. Because Business Relief applies at the point of death, the assets pass into the trust either free of IHT or at the reduced rate — the trust doesn't affect the relief itself. From that point, the trustees manage the assets for the benefit of the named beneficiaries, guided by a letter of wishes that sets out the settlor's intentions in detail.

• The letter of wishes

  • For a Business Relief Trust Will, the letter of wishes is particularly important. Business assets often require ongoing decisions — about the business itself, about investments, about when and how to distribute value to beneficiaries. The letter of wishes gives trustees the personal context and guidance they need to make those decisions in line with what the person who created the trust would have wanted. It should be written thoughtfully and kept up to date as circumstances change.

• Choosing trustees

  • Trustees of a Business Relief Trust Will may need to make ongoing decisions about business assets — whether to retain a shareholding, when to sell, how to manage a portfolio. These are decisions that require not just trustworthiness but some degree of financial understanding. In many cases, a professional co-trustee or adviser is worth appointing alongside family members, particularly where the assets are complex or the sums involved are significant.

• Business Relief and AIM portfolios

  • For investors who hold AIM-listed shares specifically for BR purposes — a strategy that has grown significantly in recent years — the April 2026 changes require particular attention. AIM portfolios structured to qualify for 100% BR will now be subject to the £1,000,000 combined cap, meaning larger portfolios will only partially qualify at the full rate. The investment strategy and the estate planning around it need to be reviewed together, and the Will needs to reflect the current position accurately.

  • It's worth noting that AIM shares carry genuine investment risk — their value can fall as well as rise, and the qualifying status of individual shares can change. A Business Relief Trust Will deals with the estate planning dimension, but the investment decisions themselves are a matter for a qualified financial adviser.

Things to consider

• Qualifying status at death — not just now

  • Business Relief is assessed at the date of death, not the date the Will was written. An asset that qualifies today may not qualify on death if circumstances change. The Will should be reviewed regularly — particularly if the business changes in nature, if shares are sold or restructured, or if the ownership position shifts. A Will that assumes BR will apply to an asset that no longer qualifies can leave a significant unexpected IHT liability.

• The two-year holding period

  • To qualify for Business Relief, assets generally need to have been owned for at least two years immediately before death. If qualifying assets have been recently acquired — or if ownership has changed — the two-year clock needs to have run before death for the relief to apply. This is particularly relevant for AIM portfolios, where individual holdings may be bought and sold.

• Interaction with the nil rate band

  • Where an estate includes both BR-qualifying and non-qualifying assets, how the nil rate band is applied between them can make a significant difference to the overall IHT position. Careful Will drafting — specifying which assets are directed into the trust and which pass elsewhere — is important to ensure the nil rate band and available reliefs are used in the most efficient way possible.

• This is specialist territory

  • Business Relief Trust Wills sit at the intersection of business law, tax planning, and estate planning. We work with tax advisers and qualified legal professionals on these arrangements to ensure the Will is properly drafted, the trust is correctly structured, and the overall plan is coherent. This is not an area where a generic Will is sufficient.

Who a Business Relief Trust Will is relevant for

A Business Relief Trust Will is relevant for any business owner, sole trader, partner, or investor who holds assets that qualify — or are intended to qualify — for Business Relief, and who wants to ensure those assets are dealt with on death in a way that preserves the relief, adds the protection of a trust, and ensures the assets reach the right people without unnecessary tax exposure or the risks of an outright inheritance. It's particularly important for those with substantial qualifying assets in the context of the April 2026 changes, where the planning review is now urgent rather than optional.