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Wills, estates and the upcoming pension changes and how to plan for them as a business owner

As a business owner, planning for growth, cash flow and strategy is second nature.

However, personal future planning is often overlooked, which can leave both family and business exposed to unnecessary risk.

When you own a business, it should form part of your wider estate planning. A well-drafted Will can ensure your business interests pass in line with your wishes, whether that means gifting the business to a co-owner, passing shares to specific individuals, or protecting assets through trusts.

What is a Will and why do you need one?

A Will is a legal document setting out who should administer your estate after death and how your assets should be distributed. It can cover money, property, possessions, business interests and even funeral wishes.

Having a valid Will is an essential part of estate planning. It gives you control over what happens to your estate, rather than leaving decisions to the law. Without one, your assets may pass to individuals you would not have chosen.

If you die without a valid Will in the UK, you die intestate. This means your estate is distributed under intestacy rules, which follow a fixed order of inheritance, usually starting with a spouse or civil partner, then children, then wider family members.

This can create difficulties, particularly where family relationships are strained or where business assets need careful succession planning. A valid Will ensures your intentions are clear and can help avoid disputes.

The importance of estate planning and how to minimise inheritance tax

Alongside making a Will, professional advice can help structure your estate efficiently, especially where business assets are involved.

One of the most common ways to mitigate IHT is lifetime gifting. You can gift up to £3000 each tax year free of IHT under the annual exemption. Gifts above this amount may still become taxable if you die within seven years.

You can also make small gifts of up to £250 per person each tax year, and wedding gifts of up to £5000 to a child, £2500 to a grandchild, or £1000 to anyone else.

Charitable gifts in your Will are exempt from IHT. If you leave more than 10 per cent of your estate to charity, the IHT rate on the remaining taxable estate can reduce from 40 per cent to 36 per cent.

Business owners should also consider Business Property Relief (BPR), which can reduce or remove IHT on qualifying business assets. Some assets qualify for 100 per cent relief, others for 50 per cent, depending on their nature.

From 6 April 2026, 100 per cent BPR will be capped at a combined value of £2.5 million across qualifying business assets. Value above that threshold will receive only 50 per cent relief, potentially increasing IHT liabilities for larger estates.

Pension changes from 2027

From April 2027, unused pension funds and certain death benefits will be included in estates for IHT calculations.

Currently, pensions usually sit outside the estate for IHT. From 2027, some individuals may be brought within the IHT threshold because of their pension value. The nil-rate band remains £325,000, with a potential additional £175,000 residence nil-rate band where a qualifying home passes to direct descendants.

Exemptions for pension death benefits paid to a surviving spouse or civil partner, and death-in-service benefits, are expected to remain outside the estate.

For business owners who have relied on pensions as part of succession planning, these changes could have a significant impact.

Why act now?

With BPR changes in 2026 and pension changes in 2027, now is the right time to review your estate planning. This means ensuring your Will is up to date, assessing the value of business and pension assets, and considering whether your current plans still meet your long-term objectives.

Chadwick Lawrence can help you navigate these changes, protect your family, preserve business continuity, and reduce future tax exposure.

With a newly opened office in Darlington, the team is accessible to businesses that are looking for support in the North East and beyond.

This was posted in Bdaily's Members' News section by Bdaily Publishing .