They have an experienced team of trust and estate practitioners covering all aspects of the trust and tax planning areas. The team is attentive and provides an excellent service.
Chambers HNW 2024
There are significant cuts to BPR impacting business owners and entrepreneurs coming soon. Our team of tax and estate planning experts are here to help you navigate these rules and maximise opportunities ahead of the 6 April 2026 deadline.
BPR is a specific relief from UK Inheritance Tax (IHT), which needs to be claimed.
Previously, qualifying business owners could transfer their business to their children completely free from inheritance tax. This meant that business owners had peace of mind that their business could be handed down to the next generation without a large tax bill, and that beneficial tax planning could be carried out prior to a sale of the business, again for the benefit of the next generation.
In broad terms, most active trading companies where the shares have been/will be held for 2 years should qualify. There are exceptions, so advice is required to confirm the tax treatment. It is also possible for companies that do a mixture of trading and investment activities to still benefit from this relief, if most of the activities are trading.
From 6 April 2026, instead of unlimited relief, there will only be a £1million allowance per person. This allowance is not transferable to spouses/civil partners.
Similarly, BPR assets currently held in trust will only benefit from a £1million allowance (with different tax treatment depending on when the trust was established).
Above the £1million allowance, 50% relief from inheritance tax will apply, resulting in a 20% charge on death on qualifying assets. However, once a business enters a binding contract for sale, it no longer qualifies for BPR, which is why this relief needs to be considered ahead of any exit planning.
In broad terms, prior to 6 April 2026, an unlimited transfer of qualifying BPR assets can be made to a trust, free of inheritance tax, provided the transferor survives seven years. Whilst a simple option is transferring outright to family members, we recommend a company or trust structure is considered, whereby additional protection can be provided in the event of divorce or bankruptcy.
The gift of assets to an individual or structure is a disposal for capital gains tax purposes, but relief is often available to postpone this gain, to prevent a dry tax charge.
If you believe these changes may affect you, please contact a member of the Michelmores team to arrange an initial call to discuss how we can help put you in the best position prior to 6 April 2026. Michelmores is able to provide advice on a bespoke structure for your individual and family situation, as well as implement your chosen structure.
At Michelmores, we are well-equipped to advise you in relation to the impact of the reforms on your business and can offer practical solutions and implementation to mitigate any increased inheritance tax liability. Our expert teams can provide a one stop solution offering comprehensive support to enable your business to navigate the evolving tax landscape.
We draft and advise on family constitutions, partnership agreements, shareholders agreements, articles of association and wills.
We advise on optimising Business Property Relief to minimise inheritance tax and protect family business assets.
We can draft trusts, act as trustee and administer trusts, offering a one-stop solution for advice and implementation.
We have experience in creating and implementing structures (including Family Investment Companies) that maximise tax efficiency and asset protection.
