Family and owner-managed businesses make up the majority of the Yorkshire business community, with 94.4% of all businesses in the region falling into this category.

With this in mind, the government’s plan to reduce inheritance tax (IHT) relief for trading company shares from April 2026 is expected to have a significant impact on thousands of people across the region. Many may find themselves facing higher tax liabilities on estates than they had previously anticipated.

As our contentious probate partner, Nazia Nawaz, explains, those who fail to prepare could face a range of financial challenges, operational disruption and emotional uncertainty for the families left behind.

This change underlines the growing importance of structured succession planning for family and owner-managed businesses. It is no longer just a sensible step; it is essential, and not only from a tax perspective.

Without effective planning, increased IHT liabilities could create real financial pressure for family businesses. For those without sufficient reserves, the need to raise funds to pay tax could lead to the sale of company shares or assets, or to the need for external investment, which in some cases may mean family control is lost. Even where there are sufficient cash reserves, the additional expenditure could still affect liquidity and disrupt the long-term financial stability of the business.

At what is already a difficult time for families, this additional financial burden could make matters considerably worse. Structured succession planning helps to protect owners, shareholders and the livelihoods of employees who depend on these family-run enterprises that form the backbone of our local economy. Failing to act now may leave businesses facing unnecessary financial strain and difficult decisions at an already sensitive time.

Nazia also highlights that good succession planning can help to avoid inheritance disputes, an issue that regularly has a detrimental effect on family businesses. Many family firms, having grown organically, operate with informal arrangements between shareholders and directors. When a shareholder-director passes away, this lack of structure can lead to conflict and uncertainty, further complicating the administration of the estate. In some cases, this can result in the sale of the business, often at a reduced value, and lasting damage to relationships.

A business that has taken a lifetime to build can quickly become fragmented without clear planning. While these discussions can be uncomfortable, taking proactive steps now to address succession and ownership will help to protect both the business and the family’s legacy.

Advance planning provides financial reassurance and ensures that the business remains resilient and adaptable. Reviewing ownership models and share structures early will help ensure that the business continues to qualify for available reliefs where possible.

Nazia’s advice is clear. Families should take action now to protect their businesses, plan for the future and preserve what they have worked so hard to build.