In the UK, wealthy families are reportedly accelerating the transfer of their assets, a response to impending changes to inheritance tax (IHT) regulations and potential new wealth tax discussions in Westminster. As the new tax year approaches, affluent parents are giving away parts of their wealth and businesses to their children earlier than previously planned. The current tax rules allow gifts given seven years prior to death to avoid IHT, while those given three to seven years before death are taxed on a sliding scale.
John Spencer, a director of GPS Marine, acknowledges that the anticipated loss of two major tax reliefs—business property relief (BPR) and agricultural property relief (APR)—is influencing these decisions. Starting next April, family businesses will incur a 20% IHT on values exceeding £1 million. For instance, Spencer’s company could face an IHT liability of up to £4 million under the new rules.
In anticipation of these changes, many affluent individuals are reconfiguring company ownership structures and establishing trusts to mitigate tax implications. For instance, the family behind Arnold Clark Automobiles restructured their company ownership shortly before the budget announcement, which included a £1 million cap for BPR. Industry experts note a trend towards gifting wealth as a proactive measure to offset potential tax liabilities, although the government is exploring tightening regulations on such practices.
As wealthy families explore various strategies, there are concerns that their actions may hinder the government’s objective of more effectively taxing wealth. Analysts suggest that as new rules are implemented, complexity in IHT planning will increase, challenging tax authorities in their efforts to assess the tax duties of the very wealthy. A report highlighted that HMRC lacks complete data on billionaires in the UK, complicating its ability to track tax contributions. Nevertheless, HMRC has committed to enhancing digital systems and increasing resources to better manage wealth taxation.
Source: https://www.theguardian.com/money/2025/sep/13/wealthy-parents-rush-to-give-children-their-assets-as-tougher-uk-inheritance-tax-rules-loom