April 2026 tax reforms - what family businesses need to do and when

April 2026 tax reforms - what family businesses need to do and

APRIL 2026 TAX REFORMSWhat familybusinesses needto do and whenwww.burges-salmon.comProposed reforms to business property relief (“BPR”) andagricultural property relief (“APR”) are set to take effectfrom 6 April 2026.IntroductionThese reforms will significantly impact family businessowners who have until now relied on these reliefs topass down business ownership to the next generationwithout significant inheritance tax (“IHT”) liabilities.The key proposed change is that the current 100%rate of relief would be limited to the first £1 millionof combined agricultural and business property, witha 50% relief applied thereafter.In effect, qualifying assets (such as shares in tradingcompanies) would be subject to IHT at 20% on thevalue above £1m.The proposed changes will be amajor event in the lifecycle ofaffected businesses and theirowners.Family business owners should act now toreview their tax, succession and businessplans to prepare for these changes and toprotect the longevity of the family business.Our market leading private wealth team isideally placed to guide family businessesand their owners through that review.The OwnersThe immediate action for individual familyshareholders is to consider what the IHTliability might be under the new rules in theevent of their death.They should then consider whether they need totake any action to mitigate this. Options mightinclude gifting, either outright or into trust.The timing of such gifts will need to take account ofthe tax changes, the personal funding requirementsof existing shareholders and the wider familyposition.If gifts into trust are to be made, these will need tobe completed prior to 6 April 2026: after that dateimmediate tax liabilities will arise on transferringbusiness and agricultural assets into trust.Life insurance to protect against IHT liabilities mayalso be helpful.As part of this process, individuals should also reviewand update their Wills and succession plans.Similar considerations apply to family trusts whichhold shares in trading businesses. Trusts createdbefore 30 October 2024 will have a £1m allowance(with trusts created on or after 30 October 2024having a more restricted allowance).Trustees will therefore need to evaluate their positionregarding upcoming IHT charges and considerwinding up trusts if necessary.