19% of business owners plan to hand their companies over to their children within the next five years partly in response to impending cuts to inheritance tax (IHT) relief, according to research from Moore UK*.
Mark Lance, CEO of Moore UK, says that the cuts to IHT relief in April — specifically Business Property Relief (BPR) — means that inheritance tax will be paid on many businesses being passed to family members for the first time*. As a result, entrepreneurs are now looking to pass on their businesses before they die in order to reduce their IHT bill.
On December 23, 2025 the Government confirmed that IHT would be payable on the value of businesses above a £2.5m threshold.
Mark Lance warns that transferring these businesses could backfire, if those businesses are passed on to people who are not ready to manage them.
Explains Mark Lance: “There is a serious risk that business owners are being forced into these transfers by the changes to IHT to the potential detriment on those businesses. Having these very experienced business owners suddenly step away from the management of these businesses has clear disadvantages.”
“The dramatic changes to the IHT rules mean that successors could be taking over businesses before they are ready to take on the responsibility. Consequently, they may lack the life experience, expertise and know-how to manage these organisations effectively.”
Prior to the 2024 Budget, businesses being transferred to family members were effectively exempt from IHT due to BPR and Agricultural Property Relief, as previous governments feared damaging business continuity. However, from 6 April 2026, APR and BPR will be capped at £2.5 million. Any value above that will qualify for only 50% relief.
Moore’s survey found that 23% of business owners with revenues of £5-10 million intend to transfer all or part of their wealth within the next five years, making them the most likely to do so. Those with incomes of £2.5-5 million were the least likely to do the same, with just 13% planning to transfer their companies.
Lance said: “Traditionally, business owners would pass on wealth once they died. However, due to a change in policy introduced by the government, they are now seriously considering transferring that wealth within the next five years. Taxation continues to dominate the concerns of business owners. As we look toward 2026 it stands out as the single greatest challenge cited by 40% of respondents.”
He noted that as 9% of business owners say that they will not pass wealth until the next generation has built up their own business, they might “question their children’s commercial acumen and business integrity, in the short term, at least.”
Moore UK found that the wealthier a business owner is, the more likely they are to pass it on to their children within the next five years.
It said that 18% of owners whose businesses have revenues of £1-2.5 million plan to pass along wealth, including property, savings and investments, to their children. That rises to a third, for those with revenues of £20-30 million. On average, 22% of business owners plan to pass on some of their wealth.
Furthermore, 45% of business owners said they would consider leaving the UK due to the tax rules. 18% said they would leave to save income tax; 12% would depart for a country with a better environment for business growth. While 11% would relocate to save capital gains tax, and 4% to save inheritance tax.
Moore said that 21% of entrepreneurs will wait to see if this or the next government makes any further changes to the IHT rules, before deciding on whether or not to pass a business or wealth on to family members.
*Moore UK’s December 2025 Owner Managed Business Survey. 520 directors of UK businesses with an annual turnover between £1m-£30m participated in the survey.
