Tax-Efficient Investing for Succession Planning: The Business Relief Playbook

Anna Brooksbank Reveals How Asset-Backed Business Relief Services Have Become More Popular Post-Budget.

Anna Brooksbank, Senior Business Development Manager for Blackfinch Investments, delivered a masterclass on asset-backed Business Relief (BR) services - investments she describes as designed to be stable but increasingly essential in post-budget planning.

Covering the North of England from Hull to Liverpool and up to the Scottish borders, Brooksbank opened with characteristic candor: "As a result of the last budget, I'm seeing a dramatic increase in the amount of advisers reaching out." Her firm manages over £950 million in assets focused on tax-efficient investing across BR, AIM, VCTs, and EIS as well as Management Portfolio Services (MPS) and Tailored Portfolio Services (TPS) in the asset management sector.

A Labour Government Invention, Labour Government Restriction

Brooksbank reminded delegates that Business Relief originated with a Labour government in 1976, evolving in 1996 to allow individuals to buy shares in trading businesses, hold them for a minimum of two years, to enable them to pass them down with up to 100% mitigation of inheritance tax on death. The irony wasn't lost on her that another Labour government has now capped the relief.

The October 2024 Autumn Budget changes mean from April 2026 each individual receives a £1 million allowance for unquoted BR assets, applied to their estate and not per investment, with everything above taxed at a reduced rate of 20% IHT rather than 40%. AIM listed BR qualifying shares, conspicuously, lost the £1 million allowance entirely and face a flat 20% rate irrespective of the amount held.

However, she emphasised that the personal allowance operates like a Potentially Exempt Transfer (PET): "You can give it away, and then after seven years you get it back." For sizable

estates, this creates strategic planning opportunities through sequential £1 million BR investments.

Business as Usual—Actually, Busier Than Ever

Despite dramatic headlines about BR changes devastating family businesses, Brooksbank's day-to-day world hasn't materially changed. "Investments into a BR service vary considerably, but I’d estimate the average investment to be in the ballpark of £200,000. This means the million-pound cap per person may not be impacting the average investor."

However, notably, the pension changes bringing retirement funds into scope for the IHT from April 2027 have turbocharged demand. "I've never had more meetings in my diary and more people coming to me wanting information on these types of services." It is understood that average holding period for BR investments remains around eight years, but the average investor age is anticipated to drop from early 80s to late 70s - suggesting earlier, more proactive planning.

Stable investments, creating long-term outcomes.

Brooksbank walked delegates through how asset-backed BR services actually work. Blackfinch created Buckley Trading, a real company registered at Companies House that pays taxes and maintains proper accounts. Clients hold shares in Buckley Trading for two of the last five years; and on death, to qualifying for BR. This means that on their death, they could qualify for up to 100% IHT relief, subject to their wider investment holdings being under the million-pound cap.

What does Buckley Trading actually do? Property development loans, renewable energy, asset-backed lending, and forestry—UK infrastructure investments Brooksbank describes as deliberately stable: "We design these trades to make them as straight-forward as we possibly can and carefully manage the risk within the underlying assets."

An example of a property development loan could be £8.1 million for converting a demolished mill into an assisted living care facility, over 24 months, with first legal charge over the asset. Similarly, the renewable energy investments could be into onshore wind or solar farms that generate revenue from selling the electricity they generate. And then most recently we have seen addition of forestry investments into the portfolio. This has resulted in the acquisition of large areas of different aged trees so that their timber can be sold for a wide range of uses.

Within a £450 million portfolio, this represents careful diversification.

The target return starts at 3%. "Asset-backed investments like the Blackfinch Adapt IHT Service are designed to ensure the client’s funds qualify for BR once held for a minimum of two years. In an ideal world, your clients invest with Blackfinch and in two years they've gotten their BR and made their fees back."

Liquidity and the Direct Payment Scheme

Average liquidity through matched bargaining with incoming investors: four days in the first quarter of 2025. More intriguingly, Brooksbank highlighted the Direct Payment Scheme for paying IHT bills ahead of probate: "If my mum died with a £50,000 IHT bill right now, I don't have that type of cash to hand. But if she'd invested £50,000 with Blackfinch, I'd be on the phone saying, could you pay my mum's bill, please?" The scheme enables the bill to be paid directly from the investment, easing the process for everyone at an already challenging time.

Since the budget, she's seen investors using BR services specifically to ensure their children can pay the tax bill—not just for benefits of the investments and the tax relief itself.

Critical Planning Mistakes to Avoid

Brooksbank identified several areas for consideration. First, joint investments between spouses: "You're potentially missing a trick by applying together into one investment." Because the million-pound allowance doesn’t transfer, like the nil-rate band does, if one spouse should die and leave an investment to the other then the beneficiary could face a tax bill. "It’s important to discuss two single applications," she insisted.

Second, successive transfers: "Be very, very mindful with whom you choose as beneficiaries of your business relief investments in the event of your death." If BR shares pass to a beneficiary who dies a year later, he also gets business relief through successive transfers - potentially wasting valuable relief if he lacks an IHT problem.

Advanced Planning: Reclaiming the Residence Nil-Rate Band

Brooksbank's most sophisticated strategy addressed estates exceeding £2 million who've lost the Residence Nil-Rate Band. A £2.7 million estate faces an £820,000 tax bill with only £650,000 in nil-rate bands available.

A possible solution: invest £700,000 in BR, hold for two years, then move into trust. Because BR-qualifying assets hold zero value for the estate, there's no Chargeable Lifetime Transfer (CLT). The investment exits the estate, reclaiming the Residence Nil-Rate Band and reducing the IHT bill—while avoiding periodic charges as long as assets remain in BR-qualifying investments.

The Typical Client Profile

"It’s really common for us to meet clients who are worried they have left it too late to do anything else. They can't give assets away because they're concerned they’re not going to live beyond the next seven years. Maybe they considered trusts – but again, the seven year timeline applies." With whole-of-life premiums rising and health concerns limiting insurability, BR services offer swift routes to BR qualification and simple solutions without medical underwriting.

Minimum investment: £25,000. Average across the North: £150-200,000, creeping upward post-budget. Initial fees: 3%, with 0.5% annual management charge.

As Brooksbank concluded, the budget hasn't diminished BR services—it's repositioned them as an increasingly essential planning tool for estates facing the perfect storm of pension inclusion, residence nil-rate band tapering, and traditional relief restrictions.