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Inheritance Tax is changing in 2026, here’s what business owners need to know
Moneymagpie Team
19th Feb 2026
By Steve Gauke, CEO at Provira, the UK’s largest Probate Loan Company
If you own a business, there’s an important change to Inheritance Tax coming in April 2026 that you really should know about.
Until now, most family-run businesses could be passed on to children or other relatives without triggering an Inheritance Tax bill at all. But now, for a lot of business owners, that safety net is about to shrink.
This doesn’t mean every business will suddenly face a huge tax bill. But it does mean that more families will need to plan ahead, especially where most of their wealth is tied up in the business itself.
- What’s actually changing?
- Why this should matter to UK business owners
- What does this look like in practice?
- How can business owners get ahead?
- How specialist lenders can help
- Inheritance Tax rules are changing, and responsible businesses are staying ahead
- Protecting family businesses
What’s actually changing?
At the moment, when it comes to inheritance, most active businesses in the UK qualify for something called Business Property Relief.
Put simply, this means the business can be passed on tax free when the business owner dies. Until now, the size of the business that could be passed on was unlimited, making it a great way for families to transfer wealth to the next generation.
However, as of April 2026, that relief will no longer be unlimited. Instead, the first £2.5 million of qualifying business (and agricultural) assets can still be passed on tax-free, and anything above that will be taxed at around 20%.
Importantly, for married couples or civil partners that are joint owners of a business, allowances can be combined, meaning up to £5 million could still be passed on tax-free.
Still, for many businesses across the UK, that’s a big shift.
Why this should matter to UK business owners
Now it goes without saying that any pending tax bill needs to be thought through carefully, and part of inheritance planning is not just thinking about how much tax might be due, but how it might be paid.
Inheritance Tax usually has to be paid in full within six months of death. This is a pretty tight deadline, and it comes around often before probate is finished, and long before a business can realistically be sold or restructured.
For many families, that creates a horrible dilemma: do they sell part of the business? Do they borrow money to pay the bill?
If a business has money tied up in stock or property, this can be a particularly sticky situation.
What does this look like in practice?
Under the old rules, a business worth £5 million could usually be passed on without any Inheritance Tax at all.
Under the new rules, that same business could face a tax bill of £500,000 or more.
This means the family needs access to cash, and fast. If they don’t pay in time, HMRC may start charging interest on the unpaid amount.
How can business owners get ahead?
You don’t need to panic. But you do need to be organised.
At Provira, we work with a lot of families needing to pay Inheritance Tax bills quickly. Here’s what we recommend all businesses do long before the problem arises:
- Know what your business is worth
Start with a valuation, that way, you know how to plan ahead.
- Talk to an adviser
These rules aren’t simple, and everyone’s situation is different. Getting advice early gives you more options.
- Think about cash
Ask yourself one honest question: If a tax bill landed tomorrow, where would the money come from?
A big part of estate planning is having some money tucked away in case a bill lands unexpectedly. With the changes coming next month, it’s better to start planning for that as soon as possible.
How specialist lenders can help
One option more families inheriting businesses are considering is something called an Estate Advance or Inheritance Tax loan.
In simple terms, the family are able to borrow money against the value of the business before probate finishes, giving them access to cash when they need it most.
At Provira, we see our Estate Advances regularly used to pay Inheritance Tax or cover legal or estate costs.
Estate Advances are popular because they are based on the value of the estate, not personal finances or credit scores. That means that even if the family inheriting the business does not have the personal finances to take out a loan, they can still access the cash.
They’re not right for everyone, but for many families they provide breathing space at a very difficult time, rather than forcing rushed decisions that they may regret later.
Inheritance Tax rules are changing, and responsible businesses are staying ahead
It might be tempting to see the headlines about the changes to Inheritance Tax and just hope they go away.
The problem is that in the UK, the rules keep tightening and thresholds keep freezing, which means as time goes on, more businesses will be affected.
Planning early doesn’t mean locking yourself into anything. It just means you can give your family choices when they need it most.
Protecting family businesses
Family businesses aren’t just assets. They’re legacies, and often a lifetime of hard work.
If you own a business, now is the right time to understand the new Inheritance Tax changes, plan ahead, and make sure your family has options when the unthinkable happens.
Trust me, a bit of preparation now can make a world of difference when it really matters.
To find out more about Provira’s offering, visit https://provira.com/
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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