The April 2026 Business Property Relief changes mean that for the first time, owning a successful trading business generates a significant Inheritance Tax (IHT) liability- not just with the owner. But with early action and expert advice, there is an opportunity to protect what you've built.
Understand the IHT changes
Does my business qualify for Business Property Relief?
Until 5 April 2026, Business Property Relief (BPR) meant most business owners faced zero inheritance tax on qualifying shares. That protection has been fundamentally limited, and the impact is substantial.
| Rule | Before April 2026 | From April 2026 |
|---|---|---|
|
BPR rate |
100% - no limit |
100% on first £2.5 million only |
|
Effective IHT rate above the cap |
0% (no cap existed) |
20% (50% of 40%) |
|
AIM shares |
100% BPR |
50% BPR → 20% effective rate |
|
Married couples |
One allowance |
£2.5 million each (£5 million combined) |
|
Trusts |
No monetary cap |
£2.5 million total across all trusts settled |
The key point
If your estate plan relied on full BPR exemption for business assets, it needs to be urgently reviewed. Most owner-managed business owners above £2.5 million now have a material IHT liability for the first time. That liability doesn't just affect you personally - It can directly affect your company's ability to invest, grow, and sustain long-term value.
Don’t forget
This is also dependant on the business satisfying the conditions for BPR in full and without restriction, which in our experience with entrepreneurial businesses is often a common misconception.
Your exposure: What does this mean in real numbers?
These figures show the size of the new inheritance tax bill created by the April 2026 changes – and why liquidity planning for inheritance tax matters if the business is to avoid years of profit being tied up in tax payments.
| Business value | £10 million | £30 million | £50 million | £100 million |
|---|---|---|---|---|
|
Previous IHT
|
£0
|
£0
|
£0
|
£0
|
|
New IHT liability
|
£1.5 million
|
£5.5 million
|
£9.5 million
|
£19.5 million
|
|
Annual installment
|
£183,000/year
|
£550,000/year
|
£950,000/year
|
£1.95 million/year
|
|
Pre-tax cost p.a.
|
£242,000
|
£1.21 million
|
£2.07 million
|
£4.25 million
|
|
≈ First £242k of annual profit diverted for 10 years
|
≈ First £1.2 million of annual profit diverted for 10 years
|
≈ First £2.1 million of annual profit diverted for 10 years
|
≈ First £4.3 million of annual profit
|
Why is inheritance tax a business issue?
Without planning, the new IHT regime creates real operational and strategic consequences for the company itself - not just for you as an individual.
Without planning, the company may need to fund IHT liabilities through dividends. For a £30 million business, this could mean over £1.2 million of pre-tax profit redirected every year for a decade, reducing the capital available for reinvestment, acquisitions and growth.
Raising liquidity to meet an IHT bill can trigger corporation tax on asset gains, dividend tax on extraction, and the IHT itself, compounding the overall cost dramatically. Planning ahead can help structure around these layers.
Significant minority shareholders face a particular challenge if the company is unwilling or unable to help with funding, potentially forcing asset sales or leaving families exposed with no easy resolution.
Forced asset sales, weakened balance sheets, covenant breaches and succession challenges can all arise if the new regime is not addressed proactively. The businesses that plan early protect themselves against all of these outcomes.
Your action plan
Here’s how we guide our clients to protect value, create clarity and secure stronger outcomes for their business and their family.
Four steps to protect your position
Understand exactly what your new IHT liability is. Most business owners are surprised by the number. This step creates the clarity to act.
Ensure BPR qualifying status is maximised, review your Will and spousal arrnagements, and explore life insurance options.
Is your goal to sell, pass the business on, or continue building? The answer drives the optimal strategy. Time is your most valuable planning asset.
Phased gifting, building towards a liquidity event, funding new structures - any good plan adapts as family, business, and external factors change.
Why the timing matters as much as the planning itself
Many of the most effective succession strategies - phased gifting programmes, trust structures, corporate restructuring - take months or years to implement and begin working. The options available to you today may not be available in 12 or 24 months. Business owners who engage our team earliest consistently emerge with the widest range of choices - and the strongest outcomes for their business and their family.
How we can help
Every business owner faces different priorities, pressures and timelines. Our team works across five planning pathways to build a strategy that fits your goals, your family, and your business.
A new tax for businesses and their owners
From 6 April 2026, business owners now need to navigate the changes to Business Property Relief (BPR) and their exposure to Inheritance Tax (IHT).