Most advisers we speak to are already using a lending-based Business Relief provider, and that makes complete sense. These providers have built strong track records, sit on panels across the market and offer a well-established way to access BR for clients. We respect the fact that advisers are not going to abandon those relationships.
Nor do we seek in this piece to persuade advisers to move entirely away from lending-based BR.
It’s about something more specific: why asset-backed BR is worth holding alongside it, rather than being seen as a replacement.
Different investments, same relief
Loan note and lending-based BR structures and asset-backed BR structures both qualify for Business Relief, but they take fundamentally different approaches to the underlying investment. Loan notes are lending instruments, while asset-backed BR invests directly into trading businesses supported by tangible assets.
The BR rules apply equally to both: the same two-year qualifying period and relief thresholds. The difference lies entirely in the underlying investment, not in the tax treatment. A client holding either structure is working towards the same planning outcome by two genuinely different routes.
Why this matters for portfolio construction
Advisers spend a good deal of time thinking about diversification across a client’s wider portfolio: growth assets, income assets, cash for liquidity, and so on. The same thinking is rarely applied to the BR allocation itself, largely because most clients hold only one type of BR investment vehicle.
As the underlying investment approaches differ, the two can complement each other within a client portfolio: different risk profiles, different return characteristics, and different asset exposures. For a client with a significant estate, having both a lending-based BR solution and an asset-backed solution creates diversification within the BR allocation itself, not just across the wider portfolio.
This is a distinction worth making clearly to clients and advisers alike. Diversification is normally discussed in terms of asset classes across an entire portfolio. It applies just as naturally within a single planning tool, once that tool is understood to contain more than one type of underlying investment. A BR allocation is still a portfolio in its own right, even if it is only ever assessed against one purpose.
Where we fits into that picture
Our Inheritance Tax Service (ITS) invests across a diversified range of asset-backed businesses: development finance, corporate lending, hotels, forestry, care homes and commercial developments. Each of these sectors brings its own characteristics, and together they provide the service with a range of exposure within the asset-backed approach itself.
To put this into context, ITS targets returns of 3.0% to 4.5% per annum. As at 31 March 2026, it had actually delivered cumulative returns of 72.6% since launch in June 2015, equivalent to an annualised return of 5.2%. Over a decade of operation, that record offers a practical illustration of what an asset-backed approach can look like in a client’s estate plan, alongside whatever lending-based solution is already in place.
We invest directly into trading businesses rather than lending against them, each investment carries a tangible claim on real assets that supports its value if a business underperforms. It is also worth advisers asking any BR provider how share prices are set: we price its shares to match the audited balance sheet, providing a verifiable basis for the value at which clients invest and later exit. The same businesses also support jobs and real economic activity in the UK, something clients increasingly want to see evidence of.
For a client who already holds a lending-based BR investment, adding an asset-backed allocation alongside it doesn’t mean unwinding an existing relationship or questioning a panel decision. It means introducing a different investment exposure into the same part of the estate plan, invested across sectors and asset types that a lending-based structure would not typically hold.
Not a choice between two options
None of this is an argument that one approach is better than the other. Both have a legitimate place, and both are doing their jobs if they help a client’s estate qualify for relief. The point is simply that they do that job differently, and a portfolio built on a single approach is more concentrated than it needs to be.
Advisers are not being asked to reconsider their existing BR relationships. The panel provider that a client already holds continues to do exactly what it has always done. The question is simply whether there is room, within the same part of the estate plan, for a second approach that invests differently and therefore behaves differently.
Sometimes the strongest portfolio isn’t created by choosing one solution over another. It is created by combining solutions that complement each other, each contributing something the other doesn’t.
Find out how the Stellar ITS fits alongside your clients’ existing Business Relief allocation.
Important Information
Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Prospective investors should ensure that they read the brochure and fully understand the risk factors before making any investment decision. The value of investments and the income from them may fall as well as rise and is not guaranteed. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of potential future results are not a reliable indicator of actual future results.
Stellar Asset Management Limited of 20 Chapel Street, Liverpool, L3 9AG is authorised and regulated by the Financial Conduct Authority.
