BPR/APR reforms: Family business guide

For many families, ownership of the business and the assets used by it may be split across a series of owners, including family members, family trusts, companies, partnerships and pension schemes. To understand what the IHT might be for each person or trust, you need to understand who owns what.

It may be that this review reveals that some property is not owned in the way you thought it was, or legal ownership (for example, the owner named at Land Registry) has not been updated to reflect beneficial (economic) ownership. Considering any partnerships or companies, are the partners and shareholders who they should be? Is there a proper shareholders’ agreement or partnership agreement in place which reflects the way the business is run? It may be that some assets (IHT planning aside) should now be owned by other family members or entities. For example, is it appropriate for a factory or warehouse to be owned by a pension scheme or family member who no longer works in the business. If that is the case, that can be considered as part of any lifetime transfers in the steps below.

Consider for each interest owned what the value of that interest is. For spouses, the related property rules (see our discussion of this in our post on the related property rules) will mean that joint ownership will not produce a discount for minority holdings, whereas ownership split between other family members or entities may mean that there is a discount. Valuation advice should be taken on this point.

Using values (either estimated or formal) now model what any IHT would be on the death of certain family members or on the next charges arising within family trusts. Is this affordable? What other assets does that person own that could be used by their Executors to fund the IHT? How does that fit with the wishes as to the division of their other assets? Is there enough to go around? For trusts, do the trustees have the ability to accumulate the necessary cash to pay any ongoing IHT charges (and see our separate page for trustees for more details on this).

Estate planning should always be done with the long-term aims of the family business clearly in mind. Control and economic ownership of the assets should be considered separately. It may be that while economic ownership should now pass to the next generation, control should remain with the current generation. Or it may be that control over certain elements should pass, but not for others. Begin with your current wishes of what the end position should be and work back from this.

If your long-term aims mean that making gifts makes sense now, then that should be considered before 6 April 2026. In some cases, business owners who have gifts in mind may want to consider pressing on with making these before the next Budget on 26 November 2025. While the rules around lifetime gifts are not changing (the usual seven year time limit will apply), gifts into trust will be subject to the new limited 100% allowance from 6 April 2026. For some business owners, a trust may provide helpful flexibility. That might be, for example, where the end destination of assets is not yet determined, is determined but includes a wider pool of potential beneficiaries for whom more time is needed before a final decision is made, or a wider pool of beneficiaries that is certain but who should be able to benefit flexibly. A trust can also allow control of assets to be split from economic ownership. Any ongoing charges within these trusts will be impacted by the changes from 6 April 2026, but there is a window before 6 April 2026 to transfer relievable assets into trust without an IHT charge.

Work through the up-front tax due on possible gifts identified above. Are they affordable? Could a different approach make a difference, for example, using trusts to defer a capital gains tax charge?

Alongside any gifts or reorganisations, each individual should consider their own estate planning.

For owners who have given away substantial value, Wills and letters of wishes should be updated to reflect their reduced assets. For those who have received assets, Wills should be updated to reflect these new assets and include guidance and wishes for the future of the family business.

All Wills should be structured so as to maximise the remaining 100% allowance for relief, as well as deal with any property that under the new rules will only get 50% relief.

Individuals should also consider asset protection, such as pre- and post-nuptial agreements (marital agreements) or cohabitation agreements. Ideally these should be put in place before any substantive gifts are made. Provided the needs of the other party are properly met, these agreements can be a powerful form of protection against division of the family assets on a divorce, ringfencing them as non-marital assets.