Business Relief and healthcare professionals: planning ahead for the new rules

Business Relief reduces the value for inheritance tax purposes of any qualifying business assets owned by the deceased. Where the relief applies at 100%, the relevant business interest may pass to beneficiaries without an inheritance tax charge. 100% relief is available for shares in limited companies that are mainly trading, sole traders and partnerships that are mainly trading.

Examples of assets that healthcare professionals might own (and which can qualify for Business Relief) include:

• Shares in a private healthcare company;
• Partnership interests in a medical or dental practice;
• A trading business connected with healthcare services.

Changes expected from April 2026

From 6 April 2026, 100% Business (and Agricultural) Property Relief will be capped at £2.5m per person across both reliefs. The value above the cap will benefit from 50% relief (an effective rate of 20% IHT on the excess).

The £2.5m allowance can be transferred between spouses/civil partners. This means that a couple can leave £5m plus existing allowances to their children tax-free.

Trusts remain valuable for control and succession, but there’s no ‘beat the April 2026 deadline’ workaround. Anti‑forestalling rules apply to lifetime transfers (including into trust) made on or after 30 October 2024 if the death is on/after 6 April 2026 (so the £2.5m cap and 50% rate will still bite).

The £2.5m cap is per person and resets every seven years, whether gifting assets to an individual or to a trust. Staggered/gifting settlement programmes can be powerful.

Although IHT due on assets qualifying for the relief can be paid by interest-free instalments over ten years, it is essential to carefully plan how this additional IHT will be funded. Extracting funds from a company to pay tax can trigger income tax. Consider building a funding plan (including life cover) early.

To mitigate your future IHT exposure, consider shifting growth out of your estate. Bespoke advice is essential (and will likely include a commercial element).

Why healthcare professionals should review their planning

Many healthcare professionals operate through incorporated practices, partnerships or group structures. Where a successful practice has been built up over many years, the value of the business interest may exceed the proposed allowance. Healthcare professionals should consider:

• Confirming whether their business assets qualify for Business Relief;
• Reviewing the current value and ownership structure of their practice or company;
• Assessing how their succession plans align with the proposed reforms;
• Exploring whether lifetime gifting or other planning strategies may be appropriate.

This may be relevant for those intending to transfer ownership of their practice to family members or colleagues and/or for those approaching retirement.

Next steps

Early planning will make a real difference. Healthcare professionals should consider targeted corporate reorganisation, equalising ownership and updating their Wills to ensure that they are well positioned to preserve the value of their business interest. 

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If you would like to know more about Business Relief and how it may affect you, please contact William Hollins, in our Private Client team.