Inheritance tax changes coming into force on April 6 2026 will hit families with much larger IHT bills, putting generations of family wealth at risk warns.
Family business and agricultural assets, previously able to be passed on free of inheritance tax, will be capped at just £2.5 million per person, with anything above that hit bit an effective 20% tax charge*.
Duncan Mitchell-Innes, Deputy Head of Private Client and Partner at TWM Solicitors, says the changes will “cause huge problems for families that own businesses or farms. Many longstanding family businesses will face much higher tax liabilities than before and may be forced to sell the business to settle the IHT bill.”
How families can protect their wealth and business assets
Here are some comments from Duncan Mitchell-Innes on what companies should do to protect their wealth and businesses
- Valuations are critical
“Accurate business, share or land valuations are essential to understanding your potential tax liabilities and highlight where planning might be needed. Specialist valuers are currently in high demand, so engaging them as soon as possible is advised.”
- Ownership structure matters
“How your assets are owned (personally, in a partnership, or company) can affect both the relief and the planning options available.”
“The ownership of a business (even if exempt from IHT in itself), can impact other factors such as whether you qualify for a Residence Nil Rate Band.”
- Succession and lifetime planning
“Lifetime gifts and succession planning can help reduce tax exposure and minimise the risk of disputes later on.”
- Wills may need updating
“Existing Wills should be reviewed to ensure they are or remain tax-efficient and aligned with your current business structure and family circumstances.”
* Unused allowances will be able to be transferred to a spouse or civil partner. Where the combined value of Business Property Relief (BPR) and Agricultural Property Relief (APR) exceeds £2.5 million, relief will be reduced from 100% to 50% on the excess.
