The UK Budget 2024 has introduced some notable changes to Business Property Relief (BPR), prompting fresh considerations for family business owners looking to safeguard their legacy. BPR has long provided tax benefits on qualifying assets, making it easier to pass family businesses to the next generation. Now, with new adjustments, it’s time to reassess and plan for the future.
What’s Changing with BPR?
Until now, many family-owned business assets could be passed on free from inheritance tax, supporting smoother transitions and continuity. But from April 2026, BPR will be limited to the first £1 million of combined agricultural and business property. Any value above this threshold will receive just 50% relief, introducing potential tax liabilities that family businesses haven’t faced before.
For shares listed on the Alternative Investment Market (AIM), relief will be reduced to 50%, regardless of the asset’s value. These changes reflect the government’s aim to increase tax revenues while preserving relief for essential business assets. However, they may lead to significant tax obligations for families transferring business ownership.
What Family Business Owners Should Consider
With these changes, it’s essential for family business owners to review their plans and ensure they’re prepared. Here are some key steps to consider:
Anticipate Tax Implications: With the new £1 million cap, assets over this threshold will face inheritance tax of 20%, which may require additional planning to manage. Taking time now to assess your holdings and tax exposure can make all the difference down the line.
Ensure Business Continuity: The additional tax burden could mean some families may need to liquidate certain assets or shares to cover inheritance taxes, which can impact the business itself. Planning for continuity can help keep your business intact and thriving.
Review Investments in AIM Shares: The reduction in relief for AIM shares may make them less appealing for inheritance tax planning. Now might be a good time to revisit your investment portfolio and see if adjustments are needed.
Seek Professional Advice: Consulting with tax and financial advisers can provide clarity on these new rules and help you explore strategies to reduce tax liabilities, whether through restructuring, alternative reliefs, or trusts.
Looking Forward
Changes in the Budget may feel daunting, but with proactive planning and the right support, family businesses can still thrive across generations.
Taking the time to explore your options, ensure liquidity, and consult professionals will help your family business adapt to these shifts while keeping your legacy strong.
About the Author - Jeff Simpson is a Chartered Financial Planner at Hymans Robertson Personal Wealth. Find out more by visiting their website here The contents of this article is for general information purposes only and should not be regarded as financial advice. It should not be considered a substitute for regulated advice on specific circumstances and objectives. Watch an on-demand webinar where Jeff tax expert Anthony Whatling from Alvarez & Marsal, discuss the various outcomes of the Autumn Budget and their implications for family business owners.
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