Inheritance Tax (IHT) can place a significant burden on families, particularly when business assets are involved. With major changes to the UK tax system coming in 2026, it has never been more important to plan ahead to protect your legacy and keep family businesses in the family.
At Burnett & Reid, our Private Client solicitors in Aberdeen and Banchory advise individuals, families, and business owners across Scotland on estate and inheritance tax planning. Here’s what you need to know about the upcoming changes to Business Relief.
What is Business Relief?
Business Relief (BR), sometimes known as Business Property Relief, is a valuable form of tax relief that reduces the value of certain business assets when calculating Inheritance Tax. It can allow you to pass on a business during your lifetime or on death with little or no tax to pay.
Currently, the relief offers:
100% relief for:
- Sole trader businesses
- Shares in unlisted companies (including AIM-listed)
- Interests in trading partnerships
50% relief for:
- Shares in quoted companies where you hold a controlling interest
- Land, buildings, or machinery used for business purposes
What’s Changing from April 2026?
From 6 April 2026, the rules around Business Relief and Agricultural Property Relief are tightening.
- The first £1 million of qualifying business and agricultural assets will continue to receive 100% relief.
- Any value above £1 million will only receive 50% relief, which effectively means a 20% IHT charge on the excess.
- The £1 million allowance cannot be transferred to a surviving spouse or civil partner, it must be used on the first death.
- The £1 million limit applies across both Business Relief and Agricultural Property Relief.
- AIM-listed shares will no longer qualify for the £1 million allowance and will only attract 50% relief.
For estates with significant business interests, this could result in substantial Inheritance Tax bills if no planning is in place.
How Can You Plan Ahead?
There are steps you can take now to help mitigate the impact of these changes, such as:
- Gifting business assets during your lifetime (provided you survive seven years).
- Splitting ownership between spouses or civil partners to make use of two separate £1 million allowances.
- Reviewing your Will and business structure to ensure it is as tax-efficient as possible.
- Considering the use of Trusts, particularly when passing shares down through generations.
Each option carries advantages and risks, for example, gifting may reduce your income or control, while Trusts can involve complex rules and associated costs. That’s why tailored advice from experts is essential.
Why Act Now?
The changes to Business Relief come into force in less than a year. The sooner you review your estate and tax planning, the more strategies will be available to you, and the better protected your business will be.
At Burnett & Reid, we have been helping business owners in the North East of Scotland and across the country safeguard their assets since 1754. Our experienced Private Client team specialises in inheritance tax planning, wills, trusts, and succession planning for family businesses.
We will work with you to design a plan that protects your business interests, secures your family’s future, and ensures your estate is handled efficiently and in line with HMRC rules.
Contact our Private Client solicitors today to arrange a confidential consultation and take the first step towards protecting your legacy.