From 6 April 2026, significant changes to Inheritance Tax (IHT) rules will affect privately-owned businesses across Scotland. Currently, privately owned trading businesses–including shares in private companies–can benefit from 100% IHT relief if held for at least two years before being transferred upon death. Historically, this has meant that, while succession planning has always involved many considerations, IHT has not been a primary concern for many business owners.
Although draft legislation is still pending, it is expected that, under the new regime, 100% relief will apply only to the first £1 million of qualifying business assets per individual. Any value above this threshold will attract only 50% relief, potentially exposing excess value to IHT at 20%. While payment may be spread over ten years, this shift makes it more important than ever to have a robust plan in place–one that protects the business and ensures the tax liability can be met without disrupting operations.
Why it matters
At a time when private businesses are already navigating rising costs and economic pressures, these changes add a new layer of complexity to succession planning in the UK. For many business owners, this means re-evaluating their current plans and considering how to best protect their legacy and minimise tax exposure.
How MFMac can support you
Early and strategic succession planning will be key to minimising
Early and strategic succession planning will be key to minimising exposure to IHT and ensuring a smooth transition of business assets to the next generation. At MFMac, our Corporate and Private Client teams are regulated by the Financial Conduct Authority (FCA) and work collaboratively with you and your adviser:
- Assess eligibility for Business Relief: Working alongside your accountants and other advisers, we’ll review your current position in light of upcoming Business Relief changes and advise on how HMRC is likely to apply it.
- Explore succession options: Whether you're considering passing shares to family members or exploring alternatives like growth shares, discretionary trusts, or Family Investment Companies, we’ll help you identify tax-efficient strategies that align with your goals.
- Unlock additional reliefs through simple changes: For example, transfers between spouses remain IHT-free and could allow both partners to utilise their £1 million allowance.
- Ensure your wider succession planning is aligned: We’ll review your Wills and other estate planning documents to ensure they support your business succession strategy and offer flexibility at the time of death.
- Plan for IHT payment: Few estates have the liquidity to settle large IHT liabilities immediately. We’ll help you explore funding options–including life insurance–to ensure the business remains stable and operational.
Looking ahead
While the finer details of the legislation are still to be confirmed, now is the time to act. Whether it’s bringing forward succession plans, restructuring ownership, or reviewing your inheritance tax planning for family businesses, MFMac is here to guide you through the transition.
Get in touch to start a conversation about how we can help safeguard your business for the future.
