Six steps every business owner should complete before the rules change
Significant changes to Business Relief (BR) and the inheritance tax (IHT) treatment of BR-qualifying assets take effect on 6 April 2026. For business owners, this date creates a clear dividing line in estate and succession planning.
Transfers that can currently be made with no immediate inheritance tax charge will become more limited after the deadline. Trust structures that have historically fallen outside the IHT regime may face new constraints, and liquidity events such as a sale or restructuring will create fresh exposures.
The message is not that Business Relief is disappearing — but that timing now matters far more than it once did.
Most business owners view the period before April 2026 as a planning window. Acting early can preserve flexibility, keeps options open and help reduce the risk of unnecessary tax leakage.
Below, we set out six practical steps business owners may wish to consider ahead of the deadline.
1. Confirm Business Relief qualification and identify qualifying assets
The first step is to establish which parts of the business actually qualify for Business Relief — and which do not.
This requires a detailed review of:
- The company’s activities
- Group structures
- Share classes and voting rights
- The balance sheet composition
Common pitfalls include:
- Excess cash building up over time
- Investment activities creeping into a trading company
- Mixed groups with both trading and investment entities
These issues can dilute or eliminate BR entitlement if not addressed early. Owners should also identify assets likely to lose BR in a future sale or restructuring, allowing contingency planning to begin now.
A clear and accurate map of BR-qualifying shares is essential before any gifting, trust planning or transaction preparation takes place.
2. Review gifting strategy and trust planning before April 2026
Trusts have long been a cornerstone of business succession and estate planning. Before 6 April 2026, it remains possible to transfer any value of BR-qualifying shares into a discretionary trust with no immediate IHT charge, provided the shares qualify for full relief.
From 6 April 2026, this changes:
- The amount of BR-qualifying assets that can be transferred into trust with 100% relief will be capped at £2.5 million per individual
- Any excess above this threshold will receive only 50% relief, potentially triggering an immediate IHT charge
- The £2.5 million allowance will be transferable between spouses or civil partners, allowing up to £5 million of qualifying assets to pass free of IHT on the second death
Trusts will continue to play an important role in controlling succession, protecting family wealth and managing future generations — but the scale and timing of transfers now matter far more.
Where trusts are being considered, decisions on structure, value and beneficiaries should be made well in advance. Legal drafting, valuations and shareholder approvals can all take time.
3. Execute share reorganisations and ownership changes early
Many effective planning strategies depend on changes to the ownership structure taking place before shares can be settled into trust or before a transaction occurs.
These may include:
- Spousal equalisation of shareholdings
- Creation of new share classes
- Introduction of a holding company
- Reallocation of voting and economic rights
These steps often take longer than expected due to legal complexity, valuation work and the need for shareholder consent. Poor sequencing can unintentionally break BR conditions or create avoidable tax exposures.
Where reorganisations are required, they should be completed well before any trust transfers or sale discussions progress.
4. Start life insurance underwriting to cover BR loss on sale
A key but often overlooked risk arises at the point of sale.
When a business is sold, BR-qualifying shares are converted into cash. From that moment, the inheritance tax protection they offered disappears. If the owner dies before the proceeds are reinvested or structured appropriately, the estate may face a substantial IHT liability.
Life insurance written in trust can act as a temporary bridge, covering this exposure during the transition period. However:
- Underwriting can take weeks or months
- Medical evidence and GP reports can cause delays
- Cover may become unavailable if started too late
Beginning underwriting early ensures protection is in place when it is actually needed, rather than after the risk has already arisen.
5. Align corporate restructuring with personal estate planning
Corporate actions and personal estate planning must move together.
Business owners frequently prepare for sales, refinancings or restructurings without fully considering how these changes interact with:
- Existing wills
- Trust arrangements
- Succession intentions
- Use of BR allowances
For example, a new holding company may alter BR status. A change in voting rights may conflict with succession plans. Wills may need updating to reflect the intended post-reorganisation structure.
Coordinated advice across legal, tax and investment disciplines is essential. A small misalignment at the wrong moment can undermine years of careful planning.
6. Prepare a post-sale liquidity strategy in advance
Following a sale, owners often hold significant cash balances while deciding how to reinvest. This period creates an immediate IHT exposure and can also result in missed planning opportunities.
A forward-looking liquidity strategy should consider:
- Where proceeds will be held initially
- Whether a Family Investment Company (FIC) or Personal Investment Company (PIC) is appropriate
- How investments will be structured pending long-term decisions
- How gifting or trust strategies will continue post-sale
Planning for this stage before completion may help to reduce pressure, support tax efficiency and allows for smoother implementation once liquidity is received.
Bringing the sequence together
Each of these steps has value on its own — but order and timing are critical.
- Share reorganisations should precede trust settlements
- Insurance underwriting should begin before transaction risk emerges
- Wills should reflect the final intended structure, not the historic one
- Liquidity planning should be designed before cash is received
A clear timeline created today helps owners understand how much preparation time is genuinely required — and avoids rushed decisions in early 2026.
Final thoughts
The changes taking effect in April 2026 do not remove Business Relief, but they narrow the window for highly effective trust planning and increase the consequences of delay.
Business owners who act early retain more control, more flexibility and more planning options. Those who leave decisions too late may find that strategies once taken for granted are no longer available.
If you own a business and expect succession, restructuring or a sale to feature in your future plans, reviewing your position now is a prudent step.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.