For years, many business owners could reasonably assume their trading business would pass on free of inheritance tax, because business relief at 100% took it out of the calculation. That assumption needs rechecking after the April 2026 changes.
From April 2026, 100% relief applies only to the first £2.5 million of qualifying business and agricultural property combined (raised from the originally announced £1 million in December 2025); value above that is relieved at 50%, leaving an effective inheritance tax rate of 20% on the excess.
Relief generally requires a trading business, not one mainly holding investments, and a two-year ownership period usually applies. How you hold the business, and what your will and any shareholders' agreement say, can change the outcome significantly.
A common and expensive drafting mistake is a binding sale agreement on death, which can destroy the relief entirely.
Who runs the business the week after you die? Can your family extract value without a forced sale? Do your will, your articles and your partnership or shareholders' agreement all say the same thing? Many otherwise well-run businesses have never checked.
Get a first view of exposure under the current rules, including the business relief inputs.
The planning here interacts with pensions from April 2027 as well, so run the pension checker too.
If the numbers are material, this is specialist territory, and we can connect you with a vetted firm that handles business succession and estate planning together.
Book a free call. We will talk through your position and whether there is anything worth changing. No hard sell, no obligation.