Any comparison between BR-qualifying investments and other estate planning options should be undertaken with a regulated financial adviser following a full assessment of a client’s circumstances. BR investments are high risk. The value of unquoted investments can fall as well as rise, and eligibility for BR is not guaranteed. Investors may get back less than they invest. Tax treatment depends on individual circumstances and may change in the future.
Guide 12 min read
How does a Business Relief investment compare to other estate planning options?
Business Relief investments, gifts, trusts, AIM shares and life insurance for inheritance tax compared: the advantages and risks of each estate planning solution.
There are several established ways to reduce a client’s future inheritance tax (IHT) exposure, including gifting, trusts, life assurance and Business Relief (BR)-qualifying investments. The most suitable option depends on the client’s circumstances, priorities, and the level of control and access they wish to retain over their assets.
Gifting is one of the best-known ways to reduce a future IHT liability. In most cases, the donor must survive seven years for the gift to fall fully outside the estate. It also requires the donor to give up access to and control of the asset permanently.
A BR-qualifying investment differs on all three counts. Relief can be available once the assets (such as shares obtained as part of an investment in the Ingenious Estate Planning service) have been held for two years, provided they still meet the qualifying conditions. The investor also generally retains some access to their capital, subject to the terms of the investment and available liquidity. The nature of the risk is different, too. Rather than giving up access to a gifted asset, the investor takes on the risks associated with an unquoted, higher-risk investment.
Comparing the main estate planning options
BR-qualifying investment, e.g. Ingenious Estate Planning
| Advantages | Risks and considerations |
| • Relief can apply after two years, rather than seven for a gift • The investor generally keeps access to their money, subject to the terms of the investment • Proceeds from an existing BR-qualifying asset may carry relief across sooner, if the combined ownership period reaches two years within a five-year window • The investor retains some control over the underlying investment | • Unquoted, higher-risk investment; capital is at risk • Not ISA-eligible • BR is not guaranteed and depends on the underlying company continuing to carry on a qualifying trade • Tax rules may change • Some services, such as IEP Apex, apply age and health eligibility criteria for optional insurance cover |
Lifetime gift
| Advantages | Risks and considerations |
| • Simple to make | • Falls fully outside the estate only after seven years • The donor gives up access to and control of the gifted asset • May have other tax consequences, such as capital gains tax on certain assets |
Trust
| Advantages | Risks and considerations |
| • Assets generally fall outside the settlor's estate once transferred in, in a similar way to a gift • Can be structured around a client's specific circumstances, and combined with a BR-qualifying investment | • An entry charge may apply if the value transferred exceeds the available nil-rate band • A further charge can apply roughly every ten years, and when assets are eventually paid out to beneficiaries • The settlor generally has no direct access, though may retain some control depending on the structure • Can be complex and costly to set up and administer |
AIM shares as a BR option
| Advantages | Risks and considerations |
| • Can also qualify for BR after two years • ISA-eligible • Priced on a regulated market • Investor retains control | • From 6 April 2026, AIM shares qualify for 50% relief rather than the 100% relief available on some other BR-qualifying investments • Not every AIM company qualifies for BR • Share prices can be more volatile than an unquoted BR-qualifying investment |
Life insurance for inheritance tax, written in trust
| Advantages | Risks and considerations |
| • Sum insured can be used to help cover an IHT liability • Can help avoid the need to sell estate assets to fund the IHT bill | • Provides a payout rather than capital growth • Age and health status can restrict eligibility or affect premiums |
TECHNICAL TEAM
Ingenious Insights case studies
Ingenious Insights: more from the adviser education series
01
What is inheritance tax and who pays it?
A plain-English guide for advisers: how inheritance tax works, the key allowances and why more estates are affected than ever before.
02
What is Business Relief?
How Business Relief works, what qualifies, and what's changing from April 2026, including the new £2.5m allowance and the AIM shares change.
03
Inheritance tax changes 2026
A practical summary of the April 2026 inheritance tax changes and the steps advisers should take to protect their clients' estate plans now.
04
What does an investment in IEP provide?
An adviser's guide to what an IEP investment provides: Business Relief, optional insurance cover, a defined strategy, access to capital and Investors' Relief.
05
How does a Business Relief investment compare to other estate planning options?
Business Relief investments, gifts, trusts, AIM shares and life insurance for inheritance tax compared: the advantages and risks of each estate planning solution.
06
Business Relief and Trusts
Entry, periodic and exit charges explained for discretionary and interest in possession trusts, with worked examples and how Business Relief can help.
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