With major changes to Inheritance Tax (IHT) reliefs and pension taxation on the horizon, succession planning has never been more critical for business owners.
Historically, Business Property Relief (BPR) and Agricultural Property Relief (APR) have allowed qualifying assets to be transferred without triggering IHT and many have relied on these reliefs to pass down family businesses tax-free.
However, draft legislation confirms that from April 6 2026, the combined relief will be capped at £1 million per individual, with any excess subject to 50% relief —potentially exposing estates to substantial tax liabilities.
Crucially, this allowance is not transferable between spouses, meaning families could face unexpected tax bills unless they prepare now.
Further changes from April 2027 will see most unused pension savings and death benefits included in the taxable estate, ending their current exemption and potentially incurring a 40% IHT charge.
These reforms represent some of the most significant tax changes in recent years, and business owners are being urged to prioritise and review their succession plans.
Effective succession planning takes time and should begin well before retirement or exit.
It’s not just about tax – it’s about ensuring business continuity, protecting family wealth, and aligning ownership with long-term goals.
It involves identifying future leaders, aligning ownership with business strategy, and ensuring the right structures are in place to support a smooth transition.
Waiting until retirement or a sale is often too late and so early conversations with family members, shareholders, and advisers are key to avoiding disruption and ensuring continuity.
Find out more at free webinar
To help navigate the upcoming changes, Armstrong Watson is hosting a free webinar on Tuesday, September 16 at 9.30am to explore the practical steps business owners can take to mitigate the impact of the new rules.
Experts from the firm’s tax, financial planning, and business services teams will provide insights into how to safeguard assets and prepare for the future.
A second webinar, aimed at farming businesses will take place on September 23.
Register for the webinar to ensure your business and family are protected. Visit https://armstrongwatson.info/taxwebinar25
