Passing on a family business: the money side of succession
Succession is about people first. But the tax, the timing and the governance decide whether the business, and the family, come through it intact.
Most family businesses intend to pass to the next generation. Fewer have a plan for how. The best successions are gradual: responsibility handed over before ownership, and both before the founder steps back.
The tax framework
For deaths on or after 6 April 2026, qualifying business property gets 100% inheritance tax relief on up to £2.5 million, with unused allowance passing to a surviving spouse or civil partner. Above that, relief is 50%. Gifts during life can fall outside the estate after seven years, and gifts of shares in a trading company can usually use hold-over relief, so the gain passes to the recipient rather than being taxed now.
A succession runway
- 10 years outTalk openly as a family about who wants what, and when
- 5 to 7 yearsNext generation takes on real responsibility; governance agreed
- 3 to 5 yearsShare transfers begin; wills and shareholder agreements updated
- HandoverFounder steps back from day-to-day decisions, with a clear role if any
Governance that prevents disputes
- A shareholder agreement covering what happens on death, divorce or a desire to sell.
- Fair treatment for children who do not work in the business.
- A clear line between family roles and business roles.
- Advice that is independent of any one family member.
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This insight is general information, not advice for your circumstances. Talk to us before acting on it.