Major changes to Inheritance Tax (IHT) are on the horizon, and business owners across Sussex (and the rest of the UK) should take notice. From 6 April 2026, Business Relief (BR) – a generous IHT relief available on qualifying business assets – will be significantly restricted.
Whether you own shares a trading company, a farm, or other qualifying business assets, now is the time to act to protect your legacy and maximise the relief using trusts.
What’s changing?
Currently, BR can reduce the value of qualifying business assets by up to 100% for IHT purposes, whether transferred during your lifetime or upon death. This means that assets like shares in a trading business or farm can be passed on without triggering IHT, provided key conditions are met. These include owning the asset for at least two years and ensuring the business does not consist wholly or mainly of investment activity.
However, from April 2026, this relief will be capped. Only the first £1 million per person of qualifying assets will receive 100% BR, and any value above that will only qualify for 50% BR. That difference could result in a significant IHT bill, particularly when transferring assets into trust, which would trigger an immediate charge of 10-20% (if BR applies).
Why act now?
If you’re planning to sell your business, retire, or pass it on to the next generation in a tax-efficient, flexible and controlled manner, these changes could significantly increase your tax exposure.
Transferring BR-qualifying business assets into a trust before 6 April 2026 allows you to bank the current unlimited 100% relief and to mitigate the trust’s overall IHT liability once the new rules are in place.
Important considerations
- Asset qualification: Ensure the business asset has been held for two years and isn’t involved mainly in investment activity.
- Excepted assets: Surplus cash or personal assets not used for business purposes may not qualify for BR.
- Trust structure: A discretionary trust is often the most suitable vehicle for flexibility and control.
Don’t miss the window
Business owners should now review their holdings and estate plans, identify qualifying assets, and explore trust planning before 6 April 2026 to secure full relief under current rules.
