Inheritance Tax (IHT) can hit families hard, especially when business assets are involved. The UK tax system is changing, and Business Relief (BR) is no longer going to be unlimited in value.
With a £1m pot for Agricultural and Business Relief, estate and tax planning has never been more necessary to help keep family businesses in the family.
Remember, “If you fail to prepare, prepare to fail”.
What is Business Relief?
Business Relief reduces the value of certain business assets when calculating IHT. It can allow you to pass on your business – either during your lifetime or on death – with little or no tax to pay.
At the moment, BR offers:
100% relief for:
- Sole trader businesses
- Shares in unlisted companies (including AIM-listed)
- Interests in trading partnerships
50% relief for:
- Shares in quoted companies (if you hold a controlling interest)
- Land, buildings or machinery used in the business
What’s Changing?
From 6 April 2026, the rules are tightening:
- The first £1 million of qualifying business and agricultural assets will still get 100% relief.
- Anything above £1 million will only get 50% relief
(which means a 20% IHT charge on the excess).
A few key points:
- The £1m can’t be passed to surviving spouses or civil partners – you need to use it on a first death.
- It applies across both Business and Agricultural Property Relief
- AIM-listed shares will only qualify for 50% relief and not qualify for the £1m allowance.
This could have a big impact on estates with significant business interests.
What Can You Do?
There are steps you can take now to reduce the impact of these changes:
- Gift business assets during your lifetime (and survive 7 years).
- Split ownership between spouses to make use of both £1 million allowances.
- Review your Will and business structure.
- Use Trusts carefully, especially where there could be shares passed down generations.
Each option will have its pros and cons. Gifting might reduce your income or control. Trusts need to be carefully structured and come with their own associated costs.
Don’t Wait
These changes are coming fast. The earlier you plan, the more options you’ll have and the better protected your business will be.
Need advice?
Burnett & Reid’s Private Client team is here to help. Much has changed since we started in 1754 but the need for specialist advice for business owners hasn’t. We’ll work with you to build a plan that protects your business and secures your legacy.
Get in touch today to arrange a confidential chat.