How Inheritance Tax is handled for family businesses

Family businesses must pay Inheritance Tax when assets are passed down through the estate. Historically, the amount of tax that is paid on business assets has been reduced or sometimes entirely eliminated by Business Property Relief (BPR). 

This has been a lifeline for estates with family businesses as often most of their cash is tied up in business assets.

However, new reforms for Business and Agricultural Property Relief (APR), coming into effect on 6 April 2026, are shifting this reality.

The introduction of a new £2.5 million combined APR and BPR cap per person is going to push more estates into the taxable range.

And when HMRC has a strict 6-month deadline, finding the funds to cover an IHT bill in time can seem like an impossible challenge.

At Provira, we provide a financial solution for families dealing with complex estates every day.

Whether funds aren’t immediately available as they’re tied up in business assets or there are urgent expenses to cover, such as an Inheritance Tax bill, our Inheritance Tax Loan for business owners allows executors to keep probate moving and focus on more important things. 

Our loan provides access to up to 50% of the net value of the estate within days. Not only this, but we only charge simple interest, not compound interest, don’t charge early repayment fees, and don’t require monthly repayments. 

The loan is simply repaid in full once probate is complete and the estate has been settled.

To find out how this could work for you, reach out to our team today. 

Is there Inheritance Tax on family businesses?

Yes, family businesses could have to pay Inheritance Tax when they are passed on. They form part of the general estate and so anything above the nil-rate band of £325,000 could be charged Inheritance Tax at a standard rate of 40%.

Until this year, family businesses have benefitted significantly from Business Property Relief and Agricultural Property Relief. Under these reliefs, a qualifying business asset received either 100% or 50% Inheritance Tax relief, regardless of the value of the estate.

BPR protects trading family businesses from having to break up or sell assets, ensuring business continuity. Bigger picture, it helps to maintain economic stability and employment.

What type of family business qualifies for Business Property Relief?

Assets could qualify for Business Property Relief (BPR) if they are a business or business interest (e.g. sole trader or partnership) or shares in an active unlisted company (AIM shares). 

Any asset must have been held by the deceased for a minimum of two years before the date of death in order to qualify. 

Spouses are able to transfer their ownership allowance for business assets. So, if the deceased had owned the business asset for one year, the surviving spouse only has to own it for one more year to qualify for BPR.

Historically, 100% BPR has been given to qualifying assets, and 50% has been given to other assets including those that are used in a business but separately owned.

As of 6 April 2026, there is a new combined cap on Business and Agricultural Property Relief. Qualifying assets up to a value of £2.5 million will continue to receive 100% relief. 

Anything above this threshold will now only receive 50% relief, meaning the remaining value might be charged at half the standard Inheritance Tax rate. This would be an effective tax rate of 20%, leaving estates vulnerable to much higher Inheritance Tax bills.

Also, AIM-listed shares will no longer qualify for 100% relief regardless of whether the total business asset value sits under the £2.5 million threshold or not. They will receive only 50% relief, which means they are likely to be taxed at 20% (half the standard IHT rate).

What happens when estates with family businesses can’t meet the Inheritance Tax deadline?

If estates that contain a family business can’t meet an HMRC Inheritance Tax deadline, they may face penalties or interest charges and probate cannot move forward. 

When HMRC requires Inheritance Tax to be paid before probate is granted – within 6 months – but the money needed to pay it is tied up in the estate and won’t be released until probate is complete, it can feel like a catch 22.

Ultimately, being meticulous when planning your estate is the key to being prepared.

If an estate finds itself struggling to cover its IHT bill before the deadline, it can use personal funds, sell off assets, or take out an Inheritance Tax Loan with a probate provider, such as Provira.

However, it must do so within the deadline, which can feel tight.

Unfortunately, estates containing family businesses are going to find themselves in this position more and more as of April 2026. Business assets hold a lot of value and tend to be more illiquid, leading to lack of spare cash to meet payment deadlines of high Inheritance Tax bills.

How Provira can help family businesses handle Inheritance Tax

Handling Inheritance Tax as a family business can be a heavy burden to bear. 

Confusing systems coupled with strict deadlines and illiquid estates can put unnecessary pressure on the process.

Particularly with the introduction of the reforms to Business and Agricultural Property Relief coming in April 2026.

At Provira, we understand that dealing with this often comes at an emotional time. 

That’s why our Estate Advance, or Inheritance Tax Loan, offers not only a speedy financial solution, but low costs and a supportive member of our team to guide you through the process. 

With our loan, you: 

• Get access to up to 50% of the net value of the estate within days.

• Only pay simple interest, not compound interest, saving you money in the long run.

• Aren’t required to provide monthly repayments. We are simply repaid in full once the estate is settled.

• Hand over all HMRC payments and solicitor communication to us. We deal with all of this directly.

• Have a team member dedicated to your case from start to finish.

So you have more time to make the decisions that really matter.

To start your application, fill out our form today and we’ll be in touch very soon.