According to Cheltenham tax, audit and accountancy firm Bishop Fleming, major inheritance tax changes look set to go ahead in 2026, despite nationwide lobbying from businesses and landowners.
New draft legislation has revealed that, subject to confirmation in the upcoming Autumn 2025 Budget, the changes to inheritance tax announced in the October 2024 Budget will go ahead as planned next year.
This means for privately owned businesses in Gloucestershire, from Monday 6 April 2026, business and agricultural assets will qualify for only a £1 million allowance of 100 per cent relief from inheritance tax (IHT).
Any value in excess of this amount will be subject to a reduced rate of 50 per cent relief.
The draft legislation looks set to be passed into law in the Finance Act in early 2026, if confirmation is received in the Autumn Budget announcement in November 2025.
Peter Ball, tax partner and head of private client at Bishop Fleming, said: 'We've got a situation where, to-date, there's been no inheritance tax payable, generally, for business owners passing on shares through their estate or putting them into a trust for the benefit of their family or other individuals.
'But now we've got a fundamental shift, the biggest shift for a generation in 30 years, in terms of the inheritance tax charge.
'It had been hoped that, even if the rules were to be introduced, there may be some adjustments and concessions put in place, such as enabling spouses or civil partners to transfer any unused amounts of the £1 million allowance on death.
'However, it is confirmed that the £1 million allowance will not be transferrable.'
Bishop Fleming, which has been working with family-owned businesses in Gloucestershire and across the south west since the IHT changes were announced, has suggested options such as taking insurance out on the lives of shareholders so that liability is covered; looking at altering the company's share class rights; and exploring changing the characteristics of shareholdings to reduce the future impact of the tax changes, aligning it with a family's future plans.
For help with planning for the incoming changes, call Bishop Fleming on 01242 505970 or visit bishopfleming.co.uk.
