What’s changing from April 2026
Historically, qualifying trading businesses and agricultural property could be transferred on death with up to 100% IHT relief, provided statutory conditions were met. This has long supported family succession without forcing asset sales.
From 6 April 2026, the structure changes:
- Each individual will be entitled to a £2.5 million allowance qualifying for 100% APR and/or BPR.
- Asset values exceeding £2.5 million will receive 50% relief, rather than full exemption.
- With IHT charged at 40%, the effective tax rate on the excess may be up to 20%.
This shift means many business owners who previously expected their entire shareholding to pass IHT-free may now face an unexpected liability.
The impact will depend on the composition of the estate and interaction with other IHT thresholds and exemptions.
What This Means for Business Owners
If you’re considering a business sale, investment, or restructure, these changes make planning even more critical. For example, selling before April 2026 might create a cleaner tax position or open opportunities for capital gains tax planning, while retaining the business could expose a larger estate to future IHT.
Transferability Between Spouses
In line with other IHT allowances, the new £2.5 million cap will be transferable between married couples and civil partners.
Where structured appropriately:
- Unused relief on first death can pass to the surviving spouse.
- Up to £5 million of qualifying assets may therefore benefit from 100% relief on second death.
However, achieving this outcome depends on careful estate structuring and appropriate Will planning.
Why This Matters Now
For business owners and farming families, the reforms introduce three key commercial considerations:
1. Enterprise Value Growth Creates Exposure
Many privately owned businesses have experienced significant valuation growth in recent years. What once sat comfortably within relief limits may no longer do so by 2026.
A current valuation exercise can help determine whether exposure exists — and quantify its scale.
2. Liquidity Risk at Estate Level
IHT is typically due within six months of death. Without adequate planning, estates may need to generate liquidity quickly — often through asset disposal.
This can undermine succession intentions and result in value leakage at a sensitive time.
3. Qualification Is Technical
Relief applies only to qualifying trading assets. Surplus cash, investment activities or non-core property held within corporate structures may dilute eligibility.
Group structures should be reviewed to confirm what genuinely qualifies under BPR or APR rules.
Strategic Planning Opportunities
Although the reforms narrow full relief, they also create a window for structured planning before implementation.
Depending on individual circumstances, options may include:
- Ownership restructuring to optimise relief utilisation
- Succession planning aligned with shareholder agreements
- Consideration of gifting strategies or trust planning
- Reviewing protection solutions to manage potential liabilities
- Evaluating longer-term exit or liquidity strategies
For some owners, this may prompt broader conversations around partial sale, succession acceleration or strategic investment to manage both tax and legacy objectives.
Actions to Take Before April 2026
Now is the time to review your position. We recommend:
- Valuing your business accurately to understand exposure above the £2.5m threshold.
- Assessing which assets truly qualify for BPR or APR — not all business property or cash holdings will.
- Modelling potential IHT outcomes across different sale or succession scenarios.
- Coordinating with financial planners (such as Pareto) to explore options like trusts, gifting strategies, or protection policies.
Updating your Will to ensure business assets pass according to your wishes, in a way that complements corporate and tax planning.
How We Can Help
The 2026 reforms represent more than a technical tax amendment — they introduce a structural shift in how generational wealth tied up in private businesses and landholdings is preserved.
Knight Corporate Finance works alongside tax specialists and legal advisers to help business owners:
- Assess potential exposure under the new regime
- Model valuation scenarios
- Protect enterprise value
- Integrate succession, liquidity and transaction planning
- Work collaboratively with financial planners like Pareto to ensure an integrated tax and succession strategy
Early engagement allows greater flexibility and control.
If you would like to discuss how these changes may affect your business or estate strategy, please contact our team.
All Matters Finance Podcast
Director Paul Billingham recently featured as a guest on Pareto Financial Planning‘s All Matters Finance Podcast, discussing the changes to Inheritance Tax and the implications for businesses after April ’26.
Watch the full episode here.