Protecting your family wealth in a high-tax world 

Tom Gauterin, Legal Director at Goughs Solicitors, advises on how families can navigate today’s high‑tax environment…

By Tom Gauterin, Legal Director, Goughs Solicitors 

For generations, family businesses, farms and entrepreneurial families have built wealth with the hope of passing it on to future generations. However, recent changes to inheritance tax reliefs, coupled with forthcoming reforms to pension taxation, mean that preserving family wealth has become significantly more challenging.

The reality is that the UK’s succession planning landscape has changed. Families who fail to adapt risk seeing a substantial proportion of their wealth lost to taxation or, worse still, placing unnecessary strain on the businesses and assets they have spent decades building.

On 1 July 2026, Goughs Solicitors welcomed local professionals, business owners and families to a special event at The Concours House, ‘Protecting Your Wealth in a High-Tax World’. We examined how the increasingly complex tax and legal landscape is reshaping wealth planning and the practical steps families should now be considering.

One message emerged clearly: there is no longer a simple, tax-free solution for passing on wealth.

Perhaps most strikingly, throughout the evening many of the questions were not about avoiding tax altogether. They were about protecting businesses, treating children fairly and ensuring that decades of hard work were not undone by poor planning. The discussion reflected the very real concerns many successful families are now facing.

A new inheritance tax landscape 

The changes to Business Property Relief (BPR) and Agricultural Property Relief (APR), which took effect in April 2026, have altered a planning framework that many business owners had relied upon for years.

While valuable reliefs remain available, they are now capped, meaning larger businesses and farms may face inheritance tax liabilities that previously would not have arisen.

For many families, this presents a significant challenge because their wealth is often tied up in assets rather than cash. A successful business may have substantial value on paper, but relatively little liquidity available to meet an inheritance tax bill.

The result is that succession planning can no longer be left until later life. It needs to become an ongoing strategic consideration.

The Flower Power challenge 

To illustrate the issue, we considered the example of Flower Power Limited, a fictional renewable energy generation company valued at £10 million.

The business is owned equally by Dennis and Margaret, aged 68 and 62. Together they have built a successful enterprise generating annual profits of around £300,000 and holding cash reserves of £700,000. They have three adult children: Lily, who works in the business part-time; William, who hopes to become more involved in the future; and Rose, who has no interest in participating in the company.

Like many successful business-owning families, Dennis and Margaret’s wealth is largely tied up in the value of the company itself.

Under the new inheritance tax rules, the family’s estimated inheritance tax exposure on the second death is approximately £1 million.

While inheritance tax can often be paid in instalments over ten years, this does not eliminate the problem. If the business is required to generate cash to fund those payments, profits that could otherwise be reinvested, distributed to family members or used to support growth are effectively diverted towards meeting a tax liability.

In some cases, the real cost to the business can be significantly higher than the headline inheritance tax figure suggests. If dividends need to be extracted to fund the liability, the overall impact on family wealth can be substantial.

This is precisely why succession planning has become more important than ever.

Although entirely fictional, Dennis and Margaret’s circumstances resonated with many of the business owners in the room. Several recognised the challenge immediately: businesses with significant value but relatively little accessible cash to meet a future inheritance tax liability without affecting the business itself.

Looking beyond tax 

Historically, Business Property Relief and Agricultural Property Relief were designed to prevent viable businesses and farms from being broken up simply because an owner died.

While reliefs remain available, the reduced scope of those protections means families must now take a broader and more strategic approach.

Many business owners naturally ask what options remain available.

Some may consider transferring shares to children during their lifetime. Others may utilise trusts, which can still play an important role in estate planning when used appropriately. Additional life insurance may provide liquidity to help meet future inheritance tax liabilities.

However, each option comes with potential complications.

Gifting assets can expose family wealth to risks such as divorce, bankruptcy or future disputes. Trust structures may require founders to relinquish a degree of control and access to assets. Lifetime transfers also need to be carefully assessed from both inheritance tax and capital gains tax perspectives.

The key point is that succession planning is no longer solely a tax exercise. It must also address governance, control, family relationships and long-term business continuity.

Many attendees commented that they had always understood Business Property Relief to mean inheritance tax was unlikely to become an issue. The changes to those reliefs, coupled with the proposed reforms to pension taxation, have prompted many families to revisit planning assumptions that had remained unchanged for years.

Others had expected succession planning to be something they would address closer to retirement. Increasingly, however, the conversation is shifting towards putting plans in place much earlier, while business owners still have maximum flexibility and the widest range of planning options available.

There was also understandable concern about control. For many founders, the thought of transferring ownership raises fears about losing influence over a business they have spent decades building. In reality, careful planning, supported by well-drafted shareholders’ agreements and governance arrangements, can often allow succession planning to begin while ensuring appropriate control remains with those who have built the business.

The growing role of Family Investment Companies (FICs) 

Increasingly, families are exploring Family Investment Companies (FICs) as part of a longer-term wealth preservation strategy.

A Family Investment Company is a corporate structure designed to hold and manage family wealth across generations. While not a substitute for all other planning techniques, a FIC can provide an effective framework for combining succession planning with governance and asset protection.

For many families, the attraction lies in the ability to transfer value to younger generations while retaining a level of control over how assets are managed. This can be particularly useful where family members have differing levels of experience, involvement or financial maturity.

In the case of Flower Power Limited, Dennis and Margaret face precisely these challenges. William may eventually take on a leadership role within the business, while Rose has little interest in its management. Lily is involved but only on a part-time basis.

For some families, this also means reconsidering ownership structures that may have evolved simply because everything was placed in one person’s name. Reviewing ownership arrangements alongside shareholders’ agreements can help protect both family relationships and the long-term stability of the business.

The question is not simply how to minimise tax. It is how to ensure that ownership is structured fairly, family relationships are protected and the business remains successful long after the founders have stepped back.

For many business-owning families, Family Investment Companies are becoming an increasingly useful tool because they encourage a shift in thinking: away from simply avoiding tax and towards preserving and managing wealth effectively over the long term.

Pension planning is changing too 

Further complexity will arise from the pension changes expected from April 2027.

For many years, pensions have been viewed as one of the most tax-efficient assets to pass on to future generations because unused pension funds generally fell outside an individual’s estate for inheritance tax purposes.

The proposed reforms will significantly alter that position.

For some families, unspent pension funds may become subject to inheritance tax, potentially alongside income tax when beneficiaries draw those funds. The combined effect could result in a substantial reduction in the value ultimately received by future generations.

This may lead many individuals to reconsider long-established planning strategies. Rather than preserving pension wealth indefinitely, some may benefit from drawing additional pension income and using other planning opportunities to transfer wealth more efficiently.

Those with substantial pension funds, particularly where pensions hold commercial property or other illiquid assets, should review their arrangements carefully.

The cost of doing nothing 

The overarching message from these reforms is clear. Wealth preservation is no longer simply about reducing tax liabilities. It is about creating a robust plan that protects assets, supports future generations and preserves family harmony.

For some families, that may involve trusts. For others, lifetime gifting, insurance or Family Investment Companies may form part of the solution. In most cases, the answer will involve a combination of strategies tailored to the family’s objectives and circumstances.

The families who begin those conversations now will have the greatest range of options available to them. They will have time to put structures in place, review ownership arrangements and prepare future generations for the responsibilities that come with inheriting wealth.

Those who wait may find that opportunities become more limited, more expensive and more disruptive.

In a high-tax world, protecting family wealth requires more than good intentions. It requires careful planning, informed advice and a willingness to adapt to a changing landscape.

The sooner that process begins, the stronger the foundations will be for the generations that follow.

Pictured above: Attendees at the ‘Protecting Your Wealth in a High-Tax World’ event this month