For many years, the rules governing Inheritance Tax (IHT) have moved with only a gentle tide. Business owners, agricultural families and shareholders in unlisted companies have relied on a framework that, while imperfect, was at least familiar. That period of stability is coming to an end. The changes scheduled for April 2026 will alter the landscape in a way that brings many more estates into charge for the first time. For those whose wealth is tied up in land or trading businesses, the impact could be significant. Reliefs that once shielded large portions of agricultural and business assets will be restricted, and the assumption that these assets naturally fall outside the IHT net will no longer hold.
This shift is prompting a series of difficult but necessary conversations within families. Some are already reconsidering long-established succession plans. Others are trying to understand whether the new rules will expose them to tax for the first time. This is leading many families to ask whether they should simply wait for the new regime to arrive, or use the time between now and April 2026 to protect their position. Thoughtful planning during this window can make a real difference to the long-term tax treatment of business and agricultural assets.
What is changing and why it matters
At present, qualifying business and agricultural assets can attract up to one hundred per cent relief from IHT, regardless of their value. These reliefs have allowed farms, family companies and entrepreneurial ventures to pass between generations without the burden of a substantial tax charge. Under the incoming rules, the first £2.5million (originally planned to be £1 million – https://www.gov.uk/government/news/inheritance-tax-reliefs-threshold-to-rise-to-25m-for-farmers-and-businesses) of qualifying assets will continue to attract full relief but everything above that threshold will be eligible for only fifty per cent relief. This represents a significant contraction of the protection available to larger or asset-rich enterprises.
The reforms also affect shares traded on non-recognised exchanges such as AIM, which have until now benefited from one hundred per cent relief. Moving to a fifty per cent model may bring many long-term investors into the scope of IHT at a time when they had assumed their holdings were fully sheltered. These types of shares will not benefit from the initial tax free allowance of £2.5million.
Whilst the new £2.5 million allowance was planned not be transferable between spouses or partners, the government has now conceded this point. However, families who assume that leaving everything to the surviving spouse remains the most straightforward approach may find that this strategy prevents both partners from using their full IHT allowances (such as the Residence Nil Rate Band). It is therefore essential that Wills and succession arrangements are reviewed to ensure they remain aligned with the new rules.
What this means for business continuity and succession
For many business owners, the real concern lies not only in the tax bill itself but in the practical consequences of meeting it. When a significant portion of a person’s wealth is tied up in operational assets, an IHT charge can create immediate financial pressure. Even with instalment options extended, liquidity may be limited. Funds may need to be raised from within the business at the very moment stability is most needed. In some cases, the liability may place the long-term viability of the business at risk.
These realities are prompting many business owners to review their structures. Some are considering lifetime gifts, others are exploring corporate reorganisations, and many are re-evaluating whether their plans still reflect the environment they will be operating in from 2026 onwards. Lifetime giving can be an effective solution, but it brings its own complexities. Capital Gains Tax implications, issues of control, the readiness of the next generation, and the need to preserve financial security all need to be balanced carefully. No two families will take exactly the same route.
Why acting now provides the greatest advantage
Although the reforms do not take effect until April 2026, effective estate planning rarely happens at speed. Determining what should pass, when it should pass, and in whose hands it will be most secure requires time and reflection. Reviewing Wills, updating partnership or shareholder arrangements, and considering the interplay between personal wealth and business value are processes best undertaken without the pressure of an approaching deadline.
The principle that underpins all successful IHT planning remains the same. The most meaningful mitigation typically arises through a variety of steps taken during lifetime. That remains true even as the rules change. The weeks ahead provide a valuable opportunity to consider whether gifts, trusts or structural adjustments could help preserve value while ensuring that personal needs and family harmony remain protected.
A period of change, but also a period of opportunity
The reforms represent a significant departure from the system that business owners and agricultural families have known for decades. Yet with early, considered planning, the impact of these changes can be managed. For many, it is simply a matter of understanding how their exposure will change and deciding what combination of steps best preserves their goals.
At Buckles, our role is to support families through moments of transition with clarity and reassurance. The period between now and April 2026 is not a time for alarm, but it is a time for engagement. Reviewing existing Wills, strengthening succession plans and assessing exposure can make a real difference. For those wishing to preserve what they have built, now is the right moment to act, while the current rules still offer scope and choice.
