26th February 2025 ❘ Legal News and Commentary
Is your leisure or tourism business affected by the reduction in business property relief?
Following the Autumn budget there has been a focus on the agricultural industry and the impact of the announced changes to inheritance tax, but there were significant changes to business property relief too and many leisure and tourism businesses are yet to realise they could be affected. Richard Miller, our Chairman and lead Partner for our Wealth and Succession Planning service discusses…
In the first budget of the new Labour government, reforms to agricultural property relief and business property relief from inheritance tax were announced and much of the press attention and discussion that followed was quite rightly centred around the impact of these on farming businesses. However, the changes to business property relief will have a far wider reach – the majority of leisure and tourism businesses could find themselves impacted and should factor these changes into their wealth and succession planning for the future.
Business relief reduces the value of a business or its assets when working out how much inheritance tax has to be paid. You can secure business property relief on some of an estate’s business assets, which can be passed on either while the owner is still alive, or as part of their will.
The reforms to business property relief come into play from the 6th of April 2026 and will reduce the current relief for qualifying businesses from 100%, to 50% for anything after the first £1m of combined business property. These changes will affect individuals making lifetime gifts of assets to other individuals and gifts of assets into trusts, as well as individuals leaving assets in their estates when they die.
Given the asset values that are in play for most businesses operating within the leisure and tourism sector, there is no question that leisure and tourism businesses will be impacted by these changes unless early action is taken to plan for the future.
So, what should businesses operating in the leisure and tourism sector be doing now? The starting point is to contact your accountant and solicitor in order to determine whether your assets are affected and assuming that is the case, what the current liability would equate to post 6th April 2026. Once this has been established, your professional advisors can then set out the levers available to you in order to mitigate this position, ranging from gifting and restructuring, to insuring against the liability.
Not taking the time to do this could prove to be a costly mistake as the importance of strategic wealth and succession planning has never been more vital. Careful planning, professional advice and continuous adjustment are essential in order to devise a plan that can be set out and used as a point of reference for you going forward.
Our Wealth and Succession Planning team can help you to prepare for the transfer of your wealth in the most tax-efficient and protected manner, ensuring both the continuity of your business interests and the financial security of your next generation. You can find out more about their services here or just get in touch and we’ll be happy to help.