Cutting the IHT bill without losing control of your business
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In the Financial Times, Senior Associate, James Woods-Davison addresses the risks that can arise when business owners divide shareholdings to maximise the enlarged Business Property Relief allowance.
While the increase to £2.5mn creates new inheritance tax planning opportunities, he cautions that tax efficiency should not override commercial realities. He explains that introducing multiple shareholders can dilute control and expose founders to challenges from minority shareholders, particularly where expectations around management, remuneration and distributions are not carefully managed.
He focuses on the risk of unfair prejudice claims under the Companies Act 2006, noting that such disputes can be highly disruptive. Courts may order costly buyouts, require extensive disclosure of private company records and make awards without regard to affordability. James concludes by outlining practical steps to mitigate these risks, including strengthening corporate governance, revisiting shareholder agreements, considering the role of trustees and ensuring appropriate insurance cover is in place before restructuring ownership.
The full article was first published in the Financial Times in March 2026 (paywall).
