If you would like guidance on what your business’ succession plan could look like in conjunction with your estate planning, reach out to a member of our tax team for advice.
Changes to Business Property Relief: How will this affect your succession planning?
24 June 2025
Current Business Property Relief (BPR) legislation provides 100% relief on qualifying assets at the time of death. This means that these qualifying assets can be passed on without incurring Inheritance Tax (IHT).
For many owner-managed businesses, the succession plan has traditionally involved retaining assets, such as shares in trading companies, and transferring them to family members upon death, as long as this did not adversely affect the company’s trading performance and value. However, starting in April 2026, there will be significant changes to this relief.
Under the new rules, if implemented as proposed, only the first £1 million of assets will qualify for full relief; any assets exceeding this amount will only receive 50% relief. With these changes approaching, business owners need to consider their options.
Is immediate action required before the new rules take effect?
Gifting shares to the next generation before the changes come into play may seem like a viable strategy. However, it is essential to consider the tax implications of this approach. Additionally, altering the governance structure of the company could make this option less practical. Business owners should begin reviewing their succession plans to determine how they need to adapt. This review may involve stress testing various scenarios and conducting preliminary valuations to assess the potential impact of the legislative change. It is also important to evaluate the business’s liquidity, given that any inheritance tax may need to be funded by the company.
