For many business owners and high value individuals, protecting family wealth is as important as creating it. Succession planning, deciding how ownership and control will pass on to the next generation, is no longer just a matter for the future. With possible changes ahead to inheritance tax (IHT) and Business Property Relief (BPR), this is an ideal time to review existing arrangements.
Family businesses often assume that shares or property will qualify automatically for IHT reliefs. However, the conditions can be strict. The business must normally be trading rather than holding investments, and the qualifying ownership period must be at least two years before death or transfer. If a company is mixed-activity or part trading and part investment, there can be uncertainty over how much of the value qualifies.
Similarly, property and agricultural enterprises that rely on Agricultural Property Relief (APR) need to ensure that land is being actively farmed and that ownership and occupation requirements are met. The rules are detailed and sometimes interpreted narrowly by HMRC.
Succession planning should therefore be treated as a continuing process rather than a single event. Reviewing company structures, shareholder agreements, and wills ensures that ownership passes smoothly and that tax reliefs are not lost. In some cases, establishing a family investment company or discretionary trust may be the best way to separate control from beneficial ownership and to protect wealth across generations.
It is also worth considering the role of pensions within succession planning. Pension funds usually sit outside the estate for IHT purposes, and nominations can be updated at any time.
A properly structured plan provides peace of mind for both founders and successors. It reduces the risk of disputes, ensures the right people are in control, and preserves as much family wealth as possible. Discussing your long-term plans with us now will help ensure that your business and family assets remain secure, compliant, and ready for the future.