Strategic valuations for business owners: Preparing for Inheritance Tax reform

From 6 April 2026, the UK government is introducing major reforms to Inheritance Tax (IHT) that will directly impact business owners.

The changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) are designed to limit the scope of tax relief on business and agricultural assets

The value of your business will directly determine how much IHT your estate may owe making valuation accuracy more critical than ever, especially for estates approaching or exceeding the £1m threshold.

Unquoted share valuations will come under higher levels of scrutiny. Valuing shares in private companies is complex and HMRC will expect market value assessments based on accepted valuation methodologies, in accordance with the relevant tax legislation.

What’s changing?

From this date an effective 20% IHT rate will apply on the value of qualifying business and agricultural assets where their combined value exceeds £1 million. This £1 million allowance is potentially being reduced where lifetime gifts of qualifying assets have been made in the previous 7 years. 

Where qualifying assets are held in trust, any IHT liability on these assets, either on a 10 year anniversary or a capital distribution, will be assessed taking into account its available £1 million allowance. 

These changes mean that business owners can no longer assume full IHT exemption on their business interests and the IHT liability on estates could increase significantly.

Why valuation now takes centre stage

1. Valuation becomes critical

The value of your business plays a key role in determining your estate’s potential IHT liability.  Accurate, professional valuations are essential to: 

• Establish the portion eligible for full or partial relief 
• Ensure compliance with relevant tax legislation and avoid disputes with HMRC 
• Support succession and tax planning  

Subject to business type and asset intensity, it may be necessary to obtain valuations of assets held within the business such as its stock, plant and machinery and buildings. 

2. Succession planning needs a rethink

With relief capped, passing on a business could trigger a substantial tax bill. You may need to: 

• Split ownership across family members to maximise multiple £1 million allowances 
• Gift assets earlier, to benefit from the 7-year rule 
• Use trusts strategically

3. Liquidity planning is key

If your business is asset-rich but cash-poor, your heirs may face challenges paying IHT.  It is therefore imperative to mitigate any future tax liabilities and plan for the future settlement of them.

4. Mixed-use and investment businesses face enhanced complexity

If your business includes non-trading or investment elements (e.g. property letting), only part of its value may qualify for relief. You’ll need to seek expert tax advice to understand what assets qualify for BPR.

What business owners should do now

Commission a professional valuation of your business and your relevant shareholding if you are to understand how the new rules will impact you. 

Once a valuation has been obtained, appropriate tax and estate planning advice can be provided to mitigate the future IHT liability.

Conclusion

The IHT reforms are a wake-up call for UK businesses and owners of agricultural property. While the government aims to target relief more effectively, the new caps mean that business succession now carries real tax risk. With relief now capped and valuations under greater scrutiny, accurate, robust share valuations are essential. Acting now can help you protect your business, your family, and your legacy.  

Professional advice is therefore now more important than ever.

If you would like further information or advice in respect of the upcoming IHT reforms, please reach out to one of our experts: Jodie Jones – Forensics and Business Valuations Senior Manager, Jo White – Tax Partner, or Gemma Spencer – Solicitor, Partner and Joint Head of Legal Services.