Should you review your business structure to support future gifting?

Changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) take effect from 6 April 2026, introducing a £2.5 million cap on the value of assets that can qualify for 100% relief.

Historically, where BPR applies in full, the value of the business asset being gifted has often been less of a concern for inheritance tax purposes.

From April 2026, however, the value of what is being gifted may become far more relevant. As a result, some owner-managers may start to consider whether their current corporate structure supports future succession and gifting plans.

Why the value of business assets may start to matter more

From April 2026, a £2.5 million cap on 100% BPR and APR relief will apply.

This means some individuals may begin to plan around the value of the assets they gift, particularly if they want those gifts to fall within:

the £2.5 million relief limit, and
their available nil rate band, currently £325,000.

For direct gifts to individuals, known as potentially exempt transfers (PETs), there is no immediate inheritance tax charge. A PET only becomes fully exempt however if the donor survives for seven years after making the gift. If the donor passes away within the seven year period, the gifted asset will still be taxable as part of the donors estate.

Where relief is restricted or unavailable, the value of the asset being transferred becomes much more significant.

Could your company structure affect future gifting?

For some owner-managed businesses, the current structure of their company or group may not easily support gifting within these new parameters. This may be because the business contains a mix of assets, or because its overall value exceeds the available relief limits, making it difficult to gift part of the business efficiently.

In practice, to aid gifting plans, business owners may want to:

divide a business into components that fall within the new relief limits
separate assets they intend to gift from those they want to retain
manage the impact of any expected assets on lifetime gifts

In some circumstances, this may present an opportunity to reorganise the corporate structure to better support future gifting and succession planning.

What restructuring options might be considered?

Depending on the commercial objectives of the business and its shareholders, restructuring might include:

demergers
internal corporate reorganisations
extraction of non-core or surplus assets

The aim is often to create clearer separation between different parts of a business, which may then allow owners to make more targeted succession or gifting decisions or access reliefs.

However, these transactions need to be carefully planned and implemented. Without proper structuring, they can trigger unexpected tax charges.

Why planning ahead matters

Reorganisations and demergers often involve detailed planning, legal restructuring and advance clearance from HMRC. HMRC has a statutory 30-day period to respond to clearance applications, and implementation can take considerably longer.

As a result, business owners who are thinking about how they may pass on their business in the future may benefit from reviewing their structure well in advance.

How we can help

Our specialist team advises owner-managed businesses on inheritance tax planning, corporate reorganisations, demergers and asset extractions.

If you would like to discuss how the upcoming BPR and APR changes could affect your long-term succession plans, or simply discuss in more depth how restructuring may better facilitate your succession plans, please contact a member of our Tax team using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

Sign up to receive exclusive business insights

Join our community of industry leaders and receive exclusive reports, early event access, and expert advice to stay ahead – all delivered straight to your inbox.