If you’ve spent your life building a business, you probably want to ensure it passes smoothly to the next generation without the taxman taking an oversized slice. For years, family business owners in Crowle, North Lincolnshire, and Lincoln have relied on a "safe" assumption: that Business Property Relief (BPR) would protect 100% of their company’s value from Inheritance Tax (IHT).
But the landscape shifted significantly in April 2026. The introduction of new IHT caps means that many "off-the-shelf" or older Wills are now effectively ticking time bombs. If your Will hasn't been updated recently, you could be sleepwalking into a distressing court battle or leaving your heirs with an eye-watering tax bill that forces them to sell the company just to pay the Revenue.
At Tyto Law Solicitors, we believe in straight answers. Our Principal Solicitor, Oliver Saxon, often sees families hit with avoidable bills because they missed the "potential pitfalls" of succession planning. Here are the seven most common mistakes we see business owners making today: and how to fix them before the 2026 rules take their toll.
1. Assuming Your 100% Relief is Still Unlimited
The biggest misconception we encounter is the belief that Business Property Relief remains uncapped. Before April 2026, you could pass on a trading business of almost any value tax-free. Now, there is a combined cap of £2.5 million for 100% relief (covering both business and agricultural assets). Anything above this threshold only receives 50% relief, meaning you’re effectively taxed at 20% on the excess.
By designing a Will that acknowledges these specific thresholds, we can help you structure your estate to stay within the limits or plan for the liability. This proactive approach ensures your family isn’t blindsided by a 20% tax charge on the value you’ve worked so hard to build, preserving the company’s capital for the people who matter most.
2. Failing to "Double Up" with Your Spouse
One of the most valuable features of the new 2026 rules is the ability to transfer unused portions of your £2.5 million allowance to a surviving spouse or civil partner. However, many business owners still hold the majority of shares in one person’s name. If you die and leave everything to your spouse, you might not be using your allowance effectively, or worse, you could be "bunching" the entire value into the survivor's estate, potentially exceeding their combined £5 million allowance later on.
We can review your shareholding structure to ensure both you and your partner are positioned to use your full allowances. By balancing ownership now, we provide the benefit of a combined £5 million "tax-free" bucket. The value here is simple: you could potentially save your children hundreds of thousands of pounds in IHT just by moving some paperwork between spouses today.
3. The "Will vs. Shareholders’ Agreement" Conflict
It’s a common scenario: your Will says your shares go to your children, but your Shareholders’ Agreement says the other directors have the right to buy them. If these two documents aren't talking to each other, you’re creating a recipe for expensive litigation. A conflict here can lead to lengthy legal processes that stall the business and drain its bank accounts.
Our team at Tyto Law looks at the whole picture, not just the Will. We align your corporate documents with your personal wishes to create a seamless transition. This coordination gives you the peace of mind that your business won't grind to a halt the moment you aren't there to steer the ship, protecting both your family’s inheritance and the company’s reputation.
4. Forgetting Business Lasting Powers of Attorney
Most people understand they need an LPA for their personal health and finances, but business owners often forget about the company. If you lose capacity due to illness or an accident, who signs the payroll? Who pays the suppliers? Without a specific business-focused Lasting Powers of Attorney, your bank accounts could be frozen, and the business could collapse while your family waits for a court to appoint a deputy.
"Everybody should have an LPA!" says Oliver Saxon, our Principal Solicitor. We can help you appoint a professional or a trusted business partner to step in only when needed. This "insurance policy" for your operations ensures the business remains a going concern even in a crisis, adding a layer of security that traditional Wills simply don't provide.
5. Ignoring "Non-Qualifying" Assets (The Cash Trap)
Not everything inside your business qualifies for Business Property Relief. If your company is sitting on a large pile of surplus cash that isn't being used for day-to-day trading, HMRC may view it as an "excepted asset." This means that even if you are under the £2.5 million cap, that specific cash could be taxed at the full 40% rate.
We work with you to identify these "traps" and help you decide whether to reinvest that cash or move it into different structures. By refining what stays in the business, we maximize your tax efficiency. The value is a "cleaner" business that passes more value to your heirs without triggering unnecessary red flags with the taxman.
6. Using "Outdated" Trusts
Many family business Wills written five or ten years ago use discretionary trusts designed for a world where BPR was unlimited. Under the post-April 2026 regime, these trusts have their own specific caps and tax charges. If your Will is "revoked" by law or rendered inefficient by these new caps, the trust you intended to protect your family could actually become a tax liability.
We can modernize your Will to use "smart" trust structures that work with the 2026 caps rather than against them. Our goal is to design a solution that keeps the business in the family for generations while minimizing the "ten-year charges" that catch many trustees off guard. This ensures your legacy remains a benefit to your children, not a burden.
7. No Plan for the "20% Reality"
Even with the best planning, if your business is worth £10 million, you will likely face a tax bill on the portion above the £5 million combined spousal cap. A common mistake is failing to plan for how that tax will be paid. If the business is asset-rich but cash-poor, where will the money come from? Many families are hit with a bill and realize too late they have to sell assets at a discount just to meet the deadline.
We can help you explore options like life insurance or specific dividend strategies to provide the liquidity your family will need. By asking the right questions now, we help you build a "tax fund" so your children don't have to take on debt or sell the business to pay HMRC.
Putting Your Mind at Rest
Inheritance tax and business succession don't have to be overwhelming. At Tyto Law Solicitors, we pride ourselves on clear communication: providing straight answers without the complicated legal jargon that often surrounds these topics. Whether you are based in Crowle, Lincoln, or anywhere else in North Lincolnshire, we are here to guide you through these changes.
As Oliver Saxon often says, "Protecting your family’s future isn't just about the law; it's about the emotional security of knowing your hard work won't be undone by a single tax bill."
Have a Chat with Us
If you’re worried that your current Will might be making one of these seven mistakes, let’s have a chat. We offer an initial consultation for a fixed fee of £175. Importantly, this fee does not apply to our Wills, Lasting Powers of Attorney (LPA), and Probate services: meaning you can start those specific planning conversations with us without that initial cost.
We are flexible to your needs, offering appointments at our offices in Crowle and Lincoln, at your home, or even online during evenings and weekends.
Don't wait for a crisis to find out your Will is out of date. Contact Tyto Law Solicitors today and let us help you design a plan that truly protects your family business.
About the Author
About the Author: Oliver Saxon is Principal Solicitor at Tyto Law Solicitors, based in Crowle, North Lincolnshire. Oliver has extensive experience advising family business owners on Will writing, Inheritance Tax planning, and estate protection.