Since 6 April 2026, significant changes to Inheritance Tax (IHT) rules have affected privately owned businesses across Scotland. Historically, privately owned trading businesses, including shares in private companies, could benefit from 100% Business Relief if held for at least two years before being transferred on death. While succession planning has always involved many considerations, inheritance tax was not a primary concern for many business owners.
Under the current rules, 100% relief applies to the first £2.5 million of qualifying business and agricultural assets per individual. Any value above this threshold attracts 50% relief, potentially exposing the excess to inheritance tax at an effective rate of 20%. While payment may be spread over ten years, the changes make it more important than ever to have a robust succession plan in place that protects the business and ensures any tax liability can be met without disrupting operations.
Unused relief can also be transferred between spouses and civil partners. As a result, married couples and civil partners may be able to pass on up to £5 million of qualifying business or agricultural assets with 100% relief, providing additional scope for business succession planning.
Why it matters
Private businesses continue to face rising costs and economic pressures, and the changes to Inheritance Tax introduced in April 2026 have brought succession planning into sharper focus. For many business owners, this means reviewing how ownership, family wealth and future business transitions will be managed, while considering ways to minimise tax exposure and protect their legacy.
How MFMac can support you
Strategic succession planning is key to minimising exposure to IHT and ensuring a smooth transition of business assets to the next generation. Through our Corporate and Private Client teams, we work collaboratively with you and your advisers to:
Assess eligibility for Business Relief: Working alongside your accountants and other advisers, we'll review your current position in light of the Business Relief changes introduced in April 2026 and advise on how HMRC is likely to apply them.
Explore succession options: Whether you're considering passing shares to family members or exploring alternatives such as 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 £2.5 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 appropriate time.
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
The changes introduced in April 2026 have brought inheritance tax and succession planning into sharper focus for business owners. Whether you're considering passing a business to the next generation, restructuring ownership, preparing for a future sale or reviewing your inheritance tax strategy, early planning can help protect both your business and family wealth.
At MFMac, our Corporate and Private Client teams work together to help business owners navigate these challenges and plan for the future with confidence. Get in touch to start a conversation about how we can support your business succession and wealth protection objectives.
