Family Business Owners Beware – An exploration of the potential inheritance implications for family businesses post April 2026

There has been much discussion around the Autumn 2024 budget and the potential impact of an update to business relief and agricultural property relief for inheritance tax. This article will focus specifically on what these changes might mean for family-owned businesses in Northern Ireland.

It is no secret that the backbone of the economy in Northern Ireland is largely made up of family-owned business. The most common structure is a private limited company with shares owned by family members. Therefore, changes to the structure of business relief will have the greatest impact on these businesses.

In the 2024 budget, from 6^th April 2026 business relief for inheritance tax will only be available on the first £1M of the value of an individuals’ shares in a company. After that, the relief is 50%. This means that for a shareholding above £1M, 20% of the value of the shareholding will be subject to Inheritance tax. This has potential to have major implications for family-owned business structures. Indeed, one of the main issues of the new inheritance tax changes will be how this tax can be paid without impacting the ability of the business to continue let alone grow and expand. A family-owned business could be valued highly on paper but that is not the same as the business having sufficient liquidity to discharge a potentially unexpected tax liability for one or more shareholders. This will have greater implications where one family member, such as a parent, holds the majority of shares in the business.

There is still time to plan and address the possibility of mitigating a looming and until recently unexpected inheritance tax liability. There is no silver bullet as such but there are now (more than ever in recent memory) very important questions to be thinking about in the context of business health, growth and continuation, control of business direction, succession planning and the careful stewardship generally of family wealth. Should the creation of trust settlements be considered? Should a re-structure of certain business assets be considered? Should a family succession and business plan be developed or reviewed? Our private client team in conjunction with our corporate team and other professional advisers can support you with a view to potentially tailoring a solution reflective of your business and personal circumstances and needs.

In conclusion, the main danger at this stage is inaction. The sooner planning is considered, the sooner the advice from the planning can be actioned, the more chance that the new inheritance tax changes will not impact or harm family-owned businesses.

If you would like any further information or advice, please contact Naomi Lamont from our Private Client team.

*This information is for guidance purposes only and does not constitute, nor should it be regarded as, a substitute for taking legal advice that is tailored to your circumstances.