Changes to the IHT relief available for assets qualifying for Business Relief (BR) and Agricultural Relief (AR) are expected to come into force in April 2026. Although the legislation has not yet been finalised and a consultation is imminent in respect to trusts, the proposals cap the amount of relief available.

As such, the first £1 million of qualifying assets will be exempt from IHT and the rest will attract 50% relief, rather than the current 100% relief. Unlisted shares (such as those on the AIM market), will qualify for 50% relief, down from the current 100%.

Tina Bishop, a specialist on family business taxation with Azets in Edinburgh, said: “We are receiving a lot of enquiries from concerned business owners and are strongly advising that they avoid the urge to transfer shares. They should not let the IHT issue affect the need to adopt a strategic approach to the continuity of the family business as much as tax planning.

“There may well be other reasons why the shares have not previously been given away, and these reasons may still be valid. For example, the children might not be ready to manage and control the business.

“They may also simply not want to become involved. Sometimes the best people to take the business forward are the existing management team, with an employee buyout a better option.

“In addition, giving shares away may not be the right decision if business owners need the income and capital value. There may also be situations where gifts of shares to trusts or individuals are the best option, but it is not the right solution for everyone.”

Ms Bishop added that tax regimes often changed with governments and so there could possibly be a reversal of the current proposals in a few years’ time.

She elaborated: “Whilst business owners in their seventies or eighties should be considering succession, business owners in their forties or fifties will probably experience many more tax changes in their lifetimes.

“The other important point is that for many business owners, the business is their life, and they may simply not be ready to exit from running the company, regardless of their age.

“Whilst impending changes to IHT and BR are clearly a major cause for concern, we would strongly urge business owners to seek advice before making decisions that may not be in the best interests of themselves, their families and the business.”