Over the coming years, there will be an unprecedented transfer of wealth to the next generation, with more assets being passed down than at any point in living memory . At the same time, protecting that generational wealth transfer has become more difficult.

In the final article in this series, you’ll learn practical steps to help protect your family’s wealth and transfer it with confidence.

What changed in April 2026?

Previously, qualifying business assets could be passed on with 100% tax relief from Inheritance Tax (IHT) through Business Property Relief (BPR) .

From 6 April 2026, the 100% relief rate on qualifying business assets has been capped at £2.5 million. Any value above that threshold now receives 50% relief. The allowance can be transferred between spouses and civil partners, and will rise with inflation from 2031.

Here’s an example to illustrate the impact this will have on businesses:

Before April 2026, a business owner could have gifted shares in a qualifying limited company worth £5 million to the next generation with no inheritance tax due. Under the new rules, the first £2.5 million qualifies for full relief, but the remaining £2.5 million qualifies for only 50% relief. That leaves £1.25 million chargeable to inheritance tax at 40%, resulting in a tax bill of £500,000.

Many businesses will struggle to pay a six- or seven-figure IHT bill because the value is tied up in the business assets or goodwill rather than available in cash.

Fortunately, several family wealth transfer strategies still exist to help limit your business’s exposure.

Step 1: Understand your exposure

It’s important to understand your potential exposure before you can implement strategies to mitigate the impact of BPR and IHT on a transfer of generational wealth. Valuing your business is a great place to start. This is not always straightforward, and various factors will impact this, so we recommend this is done by a professional.

It will also be useful in identifying surplus and non-trading assets. Excess cash, investment property and other non-trading ("excepted") assets can restrict the relief available, so identifying these early gives you the chance to address them.

Once you know your numbers, you can model your likely inheritance tax liability against the £2.5 million allowance.

Step 2: Restructure if necessary

You could reduce your exposure and streamline the transfer of generational wealth by adjusting your business's structure. There are several possible approaches, including:

• Separate ("alphabet") share classes. These allow different family members to hold shares carrying different rights.
• "Freezer" and growth share arrangements. These can fix the value of your own shares and pass future growth to the next generation.
• A holding company structure. This separates trading and investment activities and ring-fences valuable assets.
• Separating control from value. This lets you pass on the economic value of the business while keeping voting control in your hands.

The right strategy will be unique to your business, so ensure you address this step with professional advice rather than on your own.

Step 3: Plan ahead and gift shares using the seven-year rule

Gifting shares during your lifetime remains one of the most effective ways to reduce a future inheritance tax bill. Outright gifts fall outside your estate entirely after seven years. If you die within a seven-year window, the tax rate decreases on a sliding scale between years three and seven.

It’s worth remembering that you do not have to give it all away. You can gift a proportion of your shares while retaining enough to keep control. This lets you transfer assets to the next generation in stages rather than all at once.

If you do gift shares, keep clear records of the date and value of every gift. Your executors will need them.

Step 4: Think about a trust

A trust can provide a flexible and protective framework for holding ownership across generations. A discretionary trust is the most common form, giving you a say over who benefits and when. It is particularly useful where beneficiaries are young, or where you want to retain influence over the timing of any transfer.

There are important mechanics to understand. Transferring assets into a trust above your available nil-rate band (currently £325,000) can trigger an immediate 20% charge on the excess. Trusts also incur additional charges on each 10-year anniversary and when assets are distributed. 

That said, business assets that qualify for relief can, in some cases, be settled into a trust without an immediate charge, although the new £2.5 million cap affects how this works.

What can you do today?

Don’t delay initiating these wealth transfer strategies. Below are practical first steps you can put in motion today:

• Arrange a business valuation so you have a clear picture to plan from.
• Model your inheritance tax exposure against the £2.5 million allowance.
• Check your ownership structure is fit to plan around.
• Decide how any tax bill would be funded, so your family is never forced into a rushed sale.
• Look at potential life insurance cover that could help minimise the impact of any identified IHT exposure.
• Review and update your will to ensure it reflects both your wishes and the current rules.
• Start talking to your family so everyone understands the plan.
• Seek professional advice to bring it all together.

Find advice you can rely on

The family wealth transfer strategies in this article interact with one another and with your own circumstances in ways that reward expert guidance. Getting the details correct, and in the right order, is where a trusted adviser makes the difference.

At Rickard Luckin, we help family businesses protect and pass on the wealth they have worked hard to build. If you would like to understand your position and the options open to you, we would be glad to help. Please speak to your usual adviser or send us a message today.