The recent changes to business relief and their impact on personal and trust investments

Posted on 04/03/2026 by Benn Little

Major reforms to Business Relief (BR) and Agricultural Property Relief (APR) will take effect from 6th April 2026, representing the most significant shift in inheritance tax (IHT) planning for business owners, investors, and trustees in decades. These changes alter how much qualifying business property can shelter from IHT and fundamentally reshape planning strategies for individuals and trusts. 

Summary of the key changes: 

1. Introduction of a new relief allowance - From 6 April 2026, a new allowance applies to business and agricultural assets: 

  • £2.5 million allowance for 100% relief, with any excess receiving 50% relief instead of 100%.
  • This applies to both individual estates and trusts. 

2. Reduced relief for AIM and non‑recognised exchange shares - Shares traded on AIM or other non‑recognised foreign exchanges will lose their 100% BR status and instead receive only 50% relief.

This is particularly important for investors using AIM portfolios for IHT efficiency. 

3. Treatment of trusts 

  • Trusts receive their own £2.5m allowance, refreshed every 10 years.
  • Exit charges for trusts will be calculated on the unrelieved value of assets.
  • The relief cap applies across all qualifying trust assets, including AIM shares. 

4. Instalment option extended

The option to pay IHT over 10 equal annual instalments, interest‑free, is extended to any asset qualifying for BR/APR, making liquidity management easier.

5. Lifetime gifting restrictions 

Gifts of BR/APR assets made on or after 30 October 2024 may reduce the relief allowance if the donor dies after 6 April 2026.

Impact on personal investors 

Higher potential inheritance tax exposure - Under the current rules, qualifying business assets can be transferred with 100% relief regardless of value. From April 2026, however: 

  • Only the first £2.5m (or, under some interpretations, £1m for BR alone) is fully exempt. 
  • Any value above this receives 50% relief, resulting in a potential effective tax rate of 20% on excess value. 

This means high value family businesses and private shareholdings will now generate significant IHT liabilities. 

AIM portfolio investors face big changes - Many individuals invest in AIM for IHT planning due to historic 100% BR. After April 2026, AIM shares no longer qualify for 100% BR, only 50% relief applies.  

The exposure to IHT could therefore double for these assets. 

Impact on trust investments 

A dedicated £2.5m allowance per trust - Each trust receives its own allowance, but crucially: 

  • The allowance covers the combined value of APR and BR assets. 
  • Any value over £2.5m is relieved at 50% only.  

For family structures using multiple trusts, these caps now significantly restrict legacy BR protection. 

Higher exit & periodic charges - With exit charges calculated on unrelieved asset values, trusts holding business shares, AIM shares, or agricultural assets may face much higher IHT charges at 10-year anniversaries or upon distributions.  

Restrictions on transfers in and out of trusts - Government guidance and advisory commentary recommend reviewing transfers before April 2026: 

  • Transfers into trust after 6 April 2026 may cause large entry charges. 
  • Transfers out could crystallise 20% IHT if value exceeds the allowance. 

Sale of business assets post change - If a business is sold after April 2026, trusts could lose any remaining BR, resulting in dramatically higher IHT liabilities.  

Conclusion 

The April 2026 reforms represent a major tightening of Business Relief. While the government has preserved BR/APR in principle, the introduction of the £2.5m allowance, reduction of relief for AIM shares, and significant trust modifications will materially increase IHT exposure for many families, business owners, and investors. 

For personal investors, portfolios designed around 100% BR, especially AIM holdings, must be reassessed. For trusts, the reforms fundamentally alter how BR assets are sheltered and taxed, requiring urgent restructuring in many cases. 

Early planning is essential, and a financial adviser can look at your estate and assess what your potential IHT liability might be. Get in touch if you wish to make a start today.

Disclaimer: This article does not constitute financial advice, and you should always seek advice from a regulated financial adviser before making any financial decisions.