Maximise your legacy with smart strategies to save on Inheritance Tax
Inheritance Tax (IHT) can significantly lower the value of your estate. Currently, Business Relief (BR) is available to business owners who maintain qualifying business assets for at least two years and continue to hold them until their death.
However, one of the changes proposed in the Autumn Budget 2024 concerns the Inheritance Tax Business Relief. Effective from April 2026, these types of assets will have reliefs capped at 100% for the first £1 million of qualifying assets. For valuations exceeding £1 million, the relief will reduce the IHT payable by 50%.
What is Business Relief?
BR reduces the value of a business or its assets when calculating IHT. If eligible, you could currently qualify for either 50% or 100% relief, depending on the ownership and type of asset.
Eligibility includes:
• Businesses or business interests (100% relief).
• Unquoted shares in a company (100% relief).
• Land, buildings, or machinery owned personally but used in the business (50% relief).
To qualify:
• The business must have been owned for at least two years.
• It must not primarily deal in land, investments, or stocks.
Additional opportunities
Since 2013, BR-qualifying AIM-listed shares can also be held within Individual Savings Accounts (ISAs), offering a potential way to mitigate IHT while benefiting from ISA tax efficiencies.
Updating your estate plan
Life changes, and so should your estate plan. Regular updates will ensure that everything stays aligned with your wishes and takes advantage of any changes in UK inheritance laws.
Key moments to update your plan:
• Birth of a child or grandchild.
• Changes in marital status (e.g. marriage, divorce).
• Significant business growth or restructuring.
• Legislative updates impacting tax relief or inheritance distribution.
Securing your business, wealth, and the wellbeing of your family
Planning for the future is a vital part of being a responsible business owner. While it might feel daunting, the benefits of careful estate planning far outweigh the challenges. By drafting a Will, creating an LPA, utilising trusts, and exploring options like cross-option agreements and BR, you can build a plan that secures your business, wealth, and the wellbeing of your family.
Whether you’re managing a small family-run firm or a thriving enterprise, by engaging with us, we’ll tailor your plan to your unique circumstances.