What every business owner needs to do this year
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Chambers HNW 2024
Significant cuts to BPR impacting business owners and entrepreneurs took effect on 6 April 2026. Our team of tax and estate planning experts are here to help you navigate the new rules.
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.
As of 6 April 2026, instead of unlimited relief, there will only be a £2.5 million allowance per person. Any unused portion of the £2.5 million allowance can be transferred to a surviving spouse or civil partner, meaning that a married couple or civil partners can benefit from a combined potential allowance of up to £5 million.
Similarly, BPR assets currently held in trust will only benefit from a £2.5 million allowance (with different tax treatment depending on when the trust was established).
Above the £2.5 million 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.
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 you.
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.
