22/09/2026
Achieving a successful handover of your business to a family member typically comes down to three aspects: early planning (ideally five to 10 years in advance), having a full understanding of the value of the business, plus open communication with all involved parties to ensure fairness.
It’s not just about passing on ownership of your company. Succession planning is also about the future leadership and management of your business.
A broad range of different scenarios are possible, including a business owner’s children owning and running the business together, or the children owning the business but having it managed and run by just one family member, or someone else from outside the family, for example.
Once the succession plan is clear, the business owner can work backwards to ensure the preparation and work is done early to achieve the best outcome for the family business.
Tax implications of succession
Depending on your chosen route and strategy for passing on your
business, there will be different tax implications. This is where expert advice can be helpful to highlight the different options and their relative tax liability.
For the purpose of calculating inheritance tax, business assets are included with your personal wealth following death, so it is important to bear this in mind when doing broader financial and estate planning.
Business relief, which offers 100% relief on IHT for eligible business assets, when transferred during your lifetime, or after death, can enable a tax efficient transfer of your family business. But exclusions and restrictions apply, including the requirement that you have owned the business for at least two years.
There is also a £2.5 million cap for the 100% level of business relief. However, business relief at 50% applies on qualifying business property, shares, land, buildings and machinery, above the £2.5 million allowance.
Again, it's important to be aware that tax relief and rates are liable to change at any time. This is when ongoing advice can be important.
Many business owners have a large proportion of their wealth tied up in property and shares. While this can create significant value, it can also make it harder to pass on wealth during your lifetime.
Passing on assets to loved ones can become free from IHT if you live for seven years after making them, but releasing assets to make those gifts is not always straightforward. Tax rules, including the seven-year rule for potentially exempt transfers (PETs), could also be changed at any time.
Alternative options, such as trusts, may be worth considering.
If a business owner decides to sell their business outside of the family, then capital gains tax is another important consideration.
Achieving fairness
Passing on a family business will rarely be straightforward, particularly if you have more than one beneficiary, a blended family, or where some of your children are actively involved in the business, while others are not.
It can be a delicate balance ensuring succession occurs in the way you wish, to protect the business, but also in a way that feels fair for everyone.
In some cases, family succession may not be the right outcome, and this will also need to be worked through and explained.
Trusts are not regulate by the Financial Conduct Authority.
Mark Nield Wealth Management is an Appointed Representative of and represents only St James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority).
SJP APPROVED 21/09/2026
