Business Inheritance Tax planning
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Business Inheritance Tax planning for directors and owners
Inheritance tax (IHT) can have major implications for company directors, entrepreneurs and family businesses. Without the right planning, up to 40% of your business assets could be lost to tax, forcing the sale of shares or property just to cover HMRC’s bill.
Specialist planning for business owners helps you protect company assets, make use of Business Property Relief (BPR), and ensure your family or successors can take control of the business without disruption.
Do you pay Inheritance Tax on a business?
Yes – a business is part of your estate and can be subject to inheritance tax. However, reliefs exist for many trading businesses that can significantly reduce liability. The most valuable of these is Business Property Relief (BPR), which can reduce IHT by up to 100% on qualifying assets.
It is important to note that from 6 April 2026, inheritance tax reforms will reshape the way estates and businesses are taxed. Company directors, business owners and their advisers should urgently review succession plans and business structures to avoid unexpected tax liabilities.
How Inheritance Tax applies to business assets
The rules can be complex, but typically:
- Shares in an unlisted trading company – often qualify for 100% BPR.
- Interests in a partnership or sole trade – often qualify for 100% BPR.
- Land, buildings or equipment used in the business – may qualify for 50% BPR.
- Investment companies and property businesses – usually do not qualify.
This means two companies of the same value could face completely different IHT outcomes depending on how they are structured.
Business succession and family continuity
Business owners are often concerned about whether their children or partners will be able to continue running the company in the future. Without proper planning:
- Shares may need to be sold to pay the tax bill.
- Business continuity can be disrupted.
- Reliefs may be lost if assets are sold too soon.
Effective succession planning ensures your business passes smoothly to the next generation while minimising the IHT burden. Find out more.
Selling or exiting a business
If you plan to sell your business, the proceeds may no longer qualify for BPR once converted to cash. Planning ahead can:
- Structure the sale to protect family wealth.
- Reinvest proceeds in qualifying assets.
- Use trusts or gifting strategies to reduce future liabilities.
Business Property Relief (BPR)
BPR is central to business inheritance tax planning. It can:
- Provide 100% relief on shares in trading companies or partnerships.
- Provide 50% relief on land, buildings or assets used in the trade.
- Apply after just two years of ownership.
However, BPR is subject to strict conditions, and HMRC regularly reviews cases. Guidance is essential to avoid pitfalls. Find out more.
How we help you plan for business inheritance tax
We combine technical expertise with a practical, business-focused approach. Our service includes:
- Initial consultation to understand your company, family goals and long-term plans
- Review of estate and business assets, including shares, partnerships and property
- Tailored inheritance tax strategy to protect both personal and business wealth
- Implementation support, working alongside your solicitor on Wills, trusts and shareholder agreements
- Ongoing reviews to adapt your plan if tax laws or your circumstances change.
We explain complex HMRC rules in straightforward terms, so you can make confident decisions about your business and family legacy.
Why choose us for business inheritance tax planning?
- Specialist advisors: Experienced in reliefs such as Business Property Relief (BPR) and Agricultural Property Relief (APR)
- Proactive planning: Protecting your business before tax liabilities arise
- Long-term support: Helping you achieve continuity and safeguard family wealth
- Clear, jargon-free advice: Explanations tailored to directors and business owners
Book a consultation today to see how we can protect your business from inheritance tax and secure your family’s future.
We also support individuals and families with personal inheritance tax planning – from wills and trusts to safeguarding estates.
“The team at Chadwicks made complex inheritance tax planning simple and reassuring. Their clarity and expertise gave us peace of mind that our business and family legacy are safeguarded.” R Thornton, Stockport
Business Inheritance Tax – Frequently asked questions
What is business inheritance tax planning?
Business inheritance tax planning is the process of structuring ownership, succession and business assets to minimise inheritance tax liabilities. It ensures company value is protected, reliefs such as Business Property Relief (BPR) are secured, and assets can be passed on smoothly.
For directors and entrepreneurs, this planning helps safeguard both the business and personal family wealth.
Do all businesses qualify for inheritance tax relief?
No, not every business qualifies. HMRC rules restrict reliefs to trading businesses, while investment or property companies usually do not benefit. Even within qualifying companies, relief can be reduced if the business holds surplus cash or excepted assets.
Professional advice is essential to confirm eligibility and avoid unexpected tax bills.
What reliefs are available for business owners?
The two main reliefs are Business Property Relief (BPR) and Agricultural Property Relief (APR). Both can reduce inheritance tax by up to 100% if conditions are met. BPR applies to trading company shares, business interests and certain assets, while APR is designed for farming businesses and agricultural land.
When should I start business inheritance tax planning?
Planning early is always advisable. Many reliefs require assets to be held for at least two years before transfer, and restructuring shares or trusts can take time. The earlier you start, the more options you have to protect the business and prepare for future succession or sale.
How is inheritance tax calculated on a business?
HMRC assesses the open market value of the business, taking into account trading activity, assets, liabilities and shareholder agreements. Reliefs such as BPR may reduce this value, but valuations can be complex.
Getting a professional assessment ensures the estate is not exposed to unnecessary tax or disputes.
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