Running a successful business, farm or entrepreneurial venture often means spending years building something of real value. For many owners, that business now represents a significant proportion of their personal and family wealth, which makes estate planning increasingly important.
While much of the focus naturally falls on growth, profitability and succession, recent and upcoming inheritance tax changes mean business owners and farmers may need to reassess how their wealth will be passed on, whether any future inheritance tax liability could arise, and how that liability would be funded.
For generations, Business Property Relief (BPR) and Agricultural Property Relief (APR) have helped qualifying businesses and farms transfer between generations with substantial relief from inheritance tax. Planned changes to these reliefs mean many owners may now need to review their succession plans, pension arrangements, gifting strategy and wider estate planning.
Understanding the BPR and APR Changes
One of the most significant developments affecting business owners and farmers is the reform of Business Property Relief and Agricultural Property Relief. From 6 April 2026, 100% relief is now only going to apply to the first £2.5 million of combined qualifying business and agricultural assets. Qualifying assets above that level are expected to receive 50% relief, which could leave them exposed to an effective inheritance tax rate of up to 20%.
For owners whose wealth is heavily concentrated in company shares, farmland, agricultural property or other qualifying business assets, this could mean a larger part of the estate becomes taxable where it may previously have benefited from full relief. The impact will vary depending on asset values, ownership structures and wider family circumstances, making personalised planning increasingly important.
Read our detailed guide:
Inheritance Tax Changes: What Farmers and Business Owners Need to Know About BPR and APR
Succession Planning Has Never Been More Important
Many people associate succession planning solely with retirement. In reality, the most effective succession plans often start years before ownership changes hands, because passing a business to the next generation involves much more than deciding who takes over.
A good succession plan should consider who will own the business, who will manage it, how family members who are not involved in the business will be treated fairly, what happens if key individuals leave unexpectedly, and whether the business has enough liquidity to continue operating smoothly.
Inheritance tax planning and succession planning are increasingly connected. A well-structured strategy can help minimise disruption, reduce uncertainty for family members and provide clarity around future ownership.
Learn more:
Business Owners & Inheritance Tax: Understanding the 2026 Rule Changes
Making Gifts During Your Lifetime
Many successful business owners eventually reach a point where they are likely to acquire more wealth than they need to sustain their own lifestyle. At that stage, attention often shifts from wealth accumulation to wealth transfer.
Helping children and grandchildren during your lifetime can be rewarding for both financial and personal reasons. This might include helping with property purchases, education costs, weddings, grandchildren’s futures or providing capital for new business ventures.
Lifetime gifting can also reduce the value of your estate for inheritance tax purposes, provided certain rules are met. However, gifting strategies should be approached carefully, as large gifts may affect your own long-term financial security and should usually form part of a broader financial plan.
Read more about gifting opportunities:
Understanding the Inheritance Tax Allowances Available to You
Understanding the Inheritance Tax Allowances Available
One of the simplest ways to begin estate planning is by ensuring available allowances are being fully utilised. A surprising number of business owners overlook opportunities that may already be available to them.
Depending on your circumstances, this could include annual gifting allowances, small gift exemptions, wedding gift allowances, gifts between spouses and civil partners, and gifts made from surplus income.
Whilst many of these allowances appear modest in isolation, they can create significant planning opportunities when used consistently over time. For some families, gifts made from excess income can become an especially powerful strategy, allowing wealth to pass to future generations without affecting their standard of living.
Explore the full article:
Understanding the Inheritance Tax Allowances Available to You
Should You Make an Outright Gift or Use a Trust?
One of the most common questions business owners ask is not whether they should pass wealth to the next generation, but how that transfer should take place. An outright gift is often simple and straightforward, but it may not always provide the control or protection a family wants.
Concerns around divorce, relationship breakdown, bankruptcy, financial immaturity, future family disputes or loss of control can make direct gifting feel uncomfortable. In some cases, a trust may provide an alternative by allowing assets to be transferred while potentially providing additional protection and control over how wealth is used.
Trusts are not automatically better than outright gifts. Each approach has advantages and disadvantages, and the most appropriate solution depends on the family’s circumstances, financial objectives and values.
Read our full comparison:
Outright Gifts or Trusts: Which is Right for Your Family?
Using Life Cover to Protect Family Wealth
Even where inheritance tax planning has been undertaken carefully, some estates may still face a future tax liability. One of the biggest challenges is not necessarily the amount of tax due but how beneficiaries will pay it.
This is particularly relevant where family wealth is tied up in private company shares, agricultural land, farms, commercial property or other illiquid assets. Without careful planning, beneficiaries may be under pressure to raise cash quickly, which can lead to assets being sold when families would rather retain ownership.
Life cover may provide one possible solution. When structured appropriately and written into trust, it can create liquidity and provide funds that beneficiaries may be able to access relatively quickly, reducing pressure on a business and preserving family assets.
Read more:
Protecting Your Family from a Potential Inheritance Tax Bill Using Life Cover
Why Pension Planning Should Not Be Overlooked
For many business owners, wealth is not only held within the business itself. Successful entrepreneurs often accumulate substantial pension funds alongside their business interests.
Historically, pensions have been viewed as one of the most tax-efficient assets to pass on to future generations. However, proposed changes from April 2027 may significantly alter how unused pension funds are treated for inheritance tax purposes.
As a result, many business owners may want to revisit long-held assumptions about whether pension assets are still best left untouched, whether more wealth should be transferred during lifetime, how pensions fit into the wider estate plan, and what impact future inheritance tax liabilities could have.
Learn more:
Inheritance Tax and Pensions: What the April 2027 Changes Could Mean for Your Family
Bringing Your Business and Estate Planning Together
The most effective inheritance tax strategies rarely rely on a single solution. Instead, they often combine succession planning, lifetime gifting, trust planning, protection planning, pension planning and the effective use of available inheritance tax allowances.
Estate planning should not be viewed in isolation from business planning. The decisions you make around ownership, succession, retirement and family support are closely linked, and a joined-up approach can help protect both the business and the family wealth behind it.
Explore the Full Business Owner Inheritance Tax Series
Inheritance Tax Changes: What Farmers and Business Owners Need to Know About BPR and APR, how the changes could affect family businesses and agricultural assets.
Understanding the Inheritance Tax Allowances Available to You, the gifting exemptions and allowances that could help reduce a taxable estate over time.
Protecting Your Family from a Potential Inheritance Tax Bill Using Life Cover, how life cover may help create liquidity and reduce pressure on family assets.
Outright Gifts or Trusts: Which is Right for Your Family? The advantages and drawbacks of different wealth transfer strategies.
Inheritance Tax and Pensions: What the April 2027 Changes Could Mean for Your Family, how proposed pension changes may affect estate planning strategy.
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