Wealth and inheritance tax after exit

While you own shares in a trading company, they may qualify for Business Relief, which can reduce inheritance tax. Once the shares are sold, you hold cash or investments instead, and Business Relief is usually lost. This means the proceeds can become fully exposed to inheritance tax at 40%, so planning before and after the sale is important.

Inheritance tax is charged at 40% on the value of an estate above the available tax-free allowances. Reliefs such as Business Relief can reduce the taxable value of qualifying business assets. From 6 April 2026, 100% Business Relief is limited to the first £2.5m of combined qualifying business and agricultural property per person, with 50% relief above that.

Business Relief reduces inheritance tax on qualifying business assets, such as shares in an unquoted trading company. From 6 April 2026, it gives 100% relief on the first £2.5m of combined qualifying business and agricultural property per person, and 50% above that. It does not usually apply to companies that mainly hold investments, or to cash after a sale.

Since April 2025, whether your worldwide assets are within UK inheritance tax depends on long-term residence rather than domicile. People who have been UK resident for a long period are generally within the scope of UK inheritance tax on their worldwide assets, and this can continue for some years after leaving. Non-long-term residents are mainly taxed on UK assets.

A family investment company is a private company set up to hold family wealth, such as sale proceeds, with family members owning different classes of shares. Parents can keep control while future growth builds up in shares held by children. It can help with inheritance tax planning, but the company pays corporation tax on its returns, and the set-up and running costs need weighing up.

A trust can help pass wealth to the next generation while keeping some control over how it is used. However, trusts have their own inheritance tax charges, and putting cash into a trust after a sale is treated very differently from putting qualifying shares into a trust before it, when Business Relief may still apply. Timing and the type of trust matter.

Yes. Lifetime gifts can reduce your estate, and outright gifts to individuals can fall outside it entirely if you survive long enough after making them. If you die too soon, the gift can still count for inheritance tax. Gifts of cash do not create capital gains tax, but gifts of other assets can, so the form of the gift matters.

Before the sale. While your shares still qualify for Business Relief, there may be options, such as gifts or putting shares into a trust, that become more expensive once the shares are turned into cash. Planning early also lets your tax adviser, wealth manager and lawyer work together so the deal structure and your long-term plans fit.

Yes. A will written while you owned the business may assume your shares would pass with Business Relief. After a sale, your estate is likely to be mostly cash or investments, which are taxed differently. Reviewing your will, and any lasting powers of attorney, helps make sure your wealth passes as you intend and in a tax-efficient way.

It can, if the new investment qualifies for Business Relief, such as shares in an unquoted trading company. Investment-type businesses, such as property letting, usually do not qualify, and conditions apply before relief is available. From 6 April 2026, 100% relief is limited to the first £2.5m per person of combined qualifying property, with 50% above that.