The ability to pass on family businesses without worrying about Inheritance Tax (IHT) is due to come to an end on 6th April 2026.
While these issues have received much attention in the case of family farms, with tractors being driven down Whitehall in December providing a great spectacle for the news bulletins, the implications are far wider.
Business Property Relief (BPR) has, for nearly forty years, allowed individuals to transfer trading businesses to the next generation free of IHT.
But the most recent UK Budget is set to change that. From next year BPR, and Agricultural Property Relief, will be capped at £1million for qualifying assets, after which the relief will be halved, reducing IHT liability by 50%.
In practical terms, this means if a business or a share of a business (whether a partnership, limited company, or other structure) is valued over £1million, the IHT on the excess will be charged at 20%.
This represents a major shift in business taxation and a sizeable challenge for many longstanding small and medium sized family firms.
We want to hear how these proposed changes are likely to affect your business, how this will impact your plans for the future, ability to trade or for future generations of your family to take the reins.
We also want to better understand how Aberdeen & Grampian Chamber of Commerce should be responding to the UK Government on your behalf. Do you think the government should rip up their plans altogether, or would a higher threshold for qualifying assets (say £5million) be a tolerable level that would allow businesses to continue to invest in their future.
We are extremely proud to have so many home-grown family businesses among our membership, many of whom have operated for years from this region and have a global reach with customers around the world.
It is our firm belief that we should cherish and nurture family firms, not tax them into oblivion.
Please email policy@agcc.co.uk to share your views by 24th January.