The Autumn Budget 2024 saw some significant changes being made that will likely impact many business owners when they come into force in 2026. With April 2026 fast approaching the Clayton & Brewill team share some insights into these upcoming changes and how business owners should prepare for them.
Key changes from April 2026
From 6 April 2026 there will be a number of inheritance tax (IHT) reforms which will change the way estates and businesses are taxed. These include:
- Business Property Relief (BPR) and Agricultural Property Relief (APR) will be capped- any value of qualifying assets over £1 million will receive only 50% relief rather than 100%, leaving the remaining amount exposed to IHT
- AIM listed shares move from 100% to 50% BPR- reducing the attractiveness of AIM portfolios as an IHT planning tool
- Nil-Rate Bands remain frozen at £325,000 (standard) and £175,000 (main residence) until 2029/30, causing more estates to fall into this scope as asset values rise
- From April 2027, unused pensions will also be subject to IHT- an end to the long-standing exemption which may create new liabilities for families and company directors with significant pension pots
For many owner-managed businesses, these changes could result in higher exposure to IHT and reduced relief on company assets. For business owners in this situation, it will be vital to reconsider estate and succession plans ahead of the 2026 IHT changes.
Planning ahead
Many business owners will never have been concerned about IHT before, but, with the upcoming changes, company directors, family businesses, high-net-worth individuals and those with property portfolios are all likely to be impacted.
With these changes coming in to force next year it is important that business owners prioritise their succession planning to ensure they are not paying more tax than they need to.
To plan ahead for the 2026 IHT changes, it may be beneficial to:
- Review your succession plan to ensure you are transferring assets at a tax efficient time
- Review your pension strategy ahead of the upcoming 2027 changes
- Check business assets to confirm whether they still qualify for IHT business relief under the new rules
- Optimise relief allocations for asset ownership between spouses
- Make use of lifetime gifting
- Review your will and ensure it makes full use of APR/BPR allowances
These proposed IHT changes are significant and will affect many business owners. Navigating these changes can be challenging and so seeking expert advice will help to save you from stress and ensure your succession plan works under these new rules.
