Estate planning does not happen in a vacuum. A client’s portfolio balances competing objectives: equity allocations for long-term growth, cash reserves for liquidity, and pensions for retirement.
Business Relief (BR) is not an alternative to traditional planning. It is a complementary tool. By integrating unquoted, asset-backed BR alongside existing investments, advisers can solve specific client problems:
Complementing Growth Assets:
Mainstream equities drive capital growth. Allocating a portion of wealth to tangible sectors – such as forestry, agriculture, or hotels – provides relatively exposure to uncorrelated unlisted assets, with asset-backing, and without disrupting the core growth profile of a portfolio.
Balancing Credit and Lending Exposures:
A common strategy is to invest in vehicles which uses fixed-return BR loan notes or corporate bonds; whereas a direct equity asset-backed structure changes the underlying risk profile. It links capital preservation and growth to tangible underlying equity assets rather than relying on borrower credit or third-party counterparty risk, or capping returns.
Retaining Control and Capital Flexibility:
Trust planning and gifting often require clients to surrender access to wealth or navigate seven-year timelines. Whilst not a preserve of only the asset-backed BR route, a qualifying BR allocation offers a different route. It provides inheritance tax mitigation within two years, while the client maintains investment exposure and access to capital if personal circumstances change.
Asset-Backed BR: Where Does it Fit?
While all qualifying BR solutions address inheritance tax challenges, the mechanisms vary.
For advisers who are taking not just a tax-mitigation but a strategic investment approach, managing downside risk, and exposure to a broad underlying asset mix, the market divides into two approaches: fixed-return structures and Discretionary Asset-Backed Equity Solutions.
Fixed/Target Return Loan Notes: A common solution in the BR marketplace, these notes often involve investing in lending vehicles that finance SMEs. They offer predictable target returns and are simple to administer, but the degree of security varies. Returns here are naturally capped and dependent on the ongoing creditworthiness of the borrowing counterparties, as well as their overall financial performance.
Direct Equity Asset-Backed Structures: This approach – used by the Stellar Inheritance Tax Service (ITS) – deploys capital as direct equity into unquoted trading businesses that own tangible infrastructure, in return for a stake in that business. Instead of relying on corporate lending, this service anchors capital, and thus returns, in real-world economic sectors, including:
Institutional commercial forestry
Sustainable agricultural property
Operational hotels and leisure hospitality
Asset-secured property development and bridging finance
By focusing on direct asset ownership, this framework supports capital preservation by anchoring investments in tangible, theoretically unconstrained (in terms of capital growth potential) assets.
It manages exposure away from public equity volatility and lessens reliance on unsecured third-party credit.
Stellar’s Inheritance Tax Service (ITS) follows this asset-backed model through a diversified portfolio spanning:
- Development finance
- Corporate lending
- Hotels
- Forestry
- Care homes
- Commercial developments.
The service targets returns of 3.0%-4.5% per annum while seeking to provide IHT relief after two years. As at 31 March 2026, it had delivered cumulative returns of 72.6% since launch in June 2015, equivalent to an annualised return of 5.2%.
For many advisers and their clients, the attraction lies in the combination of tangible underlying assets, proven investment performance and the knowledge that capital is supporting businesses, employment and long-term growth within the UK economy.
A Question of Suitability
In practice, advisers are rarely choosing between a Business Relief solution and doing nothing.
More often, they are assessing how a potential BR allocation fits alongside existing pensions, investment portfolios, trust arrangements and, crucially, other estate planning measures.
That shifts the conversation away from simple tax calculations and towards broader planning considerations, including:
- The client’s potential inheritance tax exposure.
- The importance of retaining access to capital.
- The client’s capacity for investment risk.
- The role of the allocation within the wider portfolio.
- The nature of the underlying assets and investment strategy.
Viewed through that lens, the discussion becomes less about finding a single solution and more about identifying the right combination of planning tools for the client’s circumstances.
Looking Beyond The Tax Calculation
Inheritance tax mitigation is often the catalyst for the conversation, but it is rarely the only consideration.
For many clients, the objective is not simply to reduce a future tax liability. It is to do so while maintaining flexibility, preserving capital where possible and ensuring their wealth remains aligned with their broader financial goals.
Goals which may include real-world economic outcomes and direct ownership in impactful projects.
That is why advisers continue to explore asset-backed BR solutions.
Alongside the potential inheritance tax benefits, they offer exposure to tangible underlying assets, continued access to capital and an investment approach that sits differently within a diversified estate. In the case of the Stellar ITS, it does so with a commensurate investment return, demonstrable over a long period of time.
As with any specialist investment, suitability remains paramount and capital is at risk.
However, for the right client, an asset-backed BR allocation may represent more than a tax planning tool – it can form part of a wider wealth preservation strategy.
