Protecting a business on death: why owners need more than a simple Will

For most owners, the business is the largest thing they will ever pass on - and the least planned-for. A simple Will treats it like any other asset, which can waste reliefs, strand value, and can leave a trading business paralysed at exactly the wrong moment.

The relief is no longer automatic

Since 6 April 2026, 100% Business Relief is capped at the first £2.5 million of combined qualifying business and agricultural assets, with 50% relief on the value above. Many Wills drafted prior to the cap were written for a world without a ceiling; under the new rules they could waste the availability of spousal exemption. The difference a single correct clause makes, in the worked example we use in adviser training, is £108,000 of inheritance tax.

Structure, not just distribution

Good planning also answers the questions a simple Will ignores. A Will Discretionary Trust should receive the first £2.5 million of qualifying business and agricultural assets, capturing the 100% relief in full on first death and keeping that value out of the survivor's taxable estate, while still supporting the family through the trust. Any value above £2.5 million can instead pass into an interest in possession trust for the surviving spouse, so that spousal exemption applies to that part.

Continuity matters too: who can act, who should inherit shares, and what business partners expect should all be aligned across the Will and the company's governing documents - documents that are frequently drafted years apart and never reconciled.

Do not forget incapacity

Death is not the only risk. If an owner loses capacity with no Lasting Power of Attorney (LPA) in place, the business can be left with nobody authorised to act, subject to any overriding governing document - banking frozen, decisions stuck - while a deputyship is sought. For owners, an LPA is sensible business-continuity planning.

Key takeaways

• The £2.5m relief cap makes Will drafting important for business owners
• A Will Discretionary Trust captures the relief in full on first death; any excess can use spousal exemption via an interest in possession trust
• Align the Will with company governing documents - and put an LPA in place

(We do not give regulated tax advice: our role is designing the legal structures with the tax consequences in mind, working alongside your accountant or tax adviser on the detail.) Business-owner Will reviews are carried out by STEP-qualified estate planners - complimentary and without obligation.