Business Succession Tax Calculator

BPR is an inheritance tax relief that reduces or eliminates IHT on qualifying business assets. Rate: 100% relief for unquoted trading company shares, sole trader businesses, and partnership interests. 50% relief for business property (buildings, land, machinery) used in a business.

Qualification requires: (1) the business must be trading (not investment/property), (2) you must have owned the business asset for at least 2 years, (3) the asset must still be held at date of death. Investment companies, property rental businesses, and non-trading activities generally don't qualify.

The October 2024 Budget limited BPR to 100% on the first £1 million of business/agricultural assets, with 50% above £1 million. This represents a significant change — previously unlimited 100% BPR was available. The change takes effect from April 2026, subject to legislative process.

AIM (Alternative Investment Market) shares in qualifying trading companies attracted 100% BPR after 2 years' holding. However, the 2024 Budget announced changes limiting BPR on AIM shares. Check current HMRC guidance as legislation may still be in progress.

A buy-sell agreement ensures surviving business partners/shareholders can buy out a deceased partner's share. Funded by cross-option life insurance policies, it provides liquidity without forcing a sale and can be structured to avoid IHT on the insurance payout.

Options: (1) Make the business a gift (potentially exempt transfer — IHT-free after 7 years), (2) Use BPR while you own it (100% relief), (3) Lifetime transfer to a Family Investment Company, (4) Business legacy in Will (BPR applies on death). Each has pros and cons.

A business succession strategy where: the owner converts existing shares into fixed-value preference shares (frozen) and creates new ordinary shares for family members. Future growth accrues to the new shares (in younger generation) while the preference shares (in estate) are frozen in value — reducing future IHT exposure.

Yes — a sole trader business qualifies for 100% BPR if it is a trading business (not investment/property). The net business value (assets minus liabilities) is completely exempt from IHT after 2 years of ownership. This is one of the most powerful tax benefits for small business owners.

Yes — a management buyout (MBO) can be funded via the company providing financial assistance (if allowed), vendor loan notes, private equity, or bank lending. For family succession, MBO pricing must be at arm's length to avoid HMRC challenges on undervalue.

An FIC is a private limited company holding family wealth. Directors (parents) control the company while children/grandchildren hold growth shares. Income and capital gains are within the company at lower corporation tax rates. Complex but powerful for wealth transfer — get specialist advice.

Enterprise Investment Scheme (EIS) shares in qualifying companies attract both EIS income tax relief AND BPR after 2 years. Double relief: 30% income tax relief upfront + 100% BPR on death. EIS is therefore particularly IHT-efficient for investors approaching estate planning age.

Business succession requires: a specialist IHT and business tax solicitor, a chartered tax adviser (CTA), a financial planner, and potentially a business valuator. Succession planning is complex — start 5–10 years before planned transition for maximum tax efficiency.