If you’re planning to sell a business you’ve built, or you’ve recently exchanged contracts on one, there’s a key moment to understand. Business Relief, the inheritance tax relief that applies to qualifying trading businesses, generally insulates that business from inheritance tax while you own it.
Once you enter into a binding contract for sale, meaning it’s no longer subject to conditions such as regulatory approval or completing due diligence, that protection typically falls away, not gradually, but from that point. Value that previously qualified for Business Relief for inheritance tax purposes can become fully exposed.
This isn’t a reason to delay a sale you’ve decided to make. It’s a reason to think, in good time, about what happens to that capital next, and whether there’s a way to keep some of that protection working for you, rather than starting again from nothing.
What you’re weighing up
If you’ve built, run or sold a business, or you’re the steward of significant family wealth, control is unlikely to be merely a preference. It’s how you’ve operated throughout your working life. Handing your capital to a manager you’ve never met, to pursue a strategy you had no part in shaping, doesn’t sit naturally with that.
In most cases, your day-to-day financial security is already settled. What occupies you more is what comes after: who inherits, whether the next generation is ready, and whether your capital continues to serve a purpose you’d recognise, rather than simply dispersing.
If you’re approaching or have just completed a business sale, this becomes more immediate. You’re about to hold, or already hold, substantial liquid capital, often for the first time, and the business that defined much of your working life has become cash. That shift is exactly the moment worth planning around.
A structure you own outright
A Family Trading Company is a Business Relief planning structure with one central difference from a pooled arrangement: you own the company outright. Rather than pooling your capital with other investors in a fund managed on your behalf, you hold the entire share capital of your own company, and you agree your investment strategy directly with Stellar, tailored to your circumstances. For larger subscriptions, you can further customise sector exposure.
The underlying investment activities are real: property development, forestry, hotels, care homes, lending, renewable energy. The underlying businesses are selected for their BR-qualifying trading activities and are supported by tangible assets, so you can understand where your capital is actually going, rather than relying on a strategy you’re simply asked to trust.
As you own the company, the structure also creates a natural setting for succession and family governance conversations, discussing who is involved, how decisions get made, and how capital eventually passes on, in a way a pooled arrangement doesn’t offer.
The planning backdrop
Any plan at this scale needs to account for the current rules. The Residence Nil Rate Band, an extra allowance available when a home passes to children or grandchildren, starts to taper once a net estate exceeds £2m and can be lost entirely for larger estates. The core nil rate band of £325,000 per person still applies, along with any unused allowance transferred from a spouse or civil partner, but for a larger estate, the exposure to a 40% charge on unplanned wealth is considerable.
Since April 2026, a combined Agricultural and Business Property Relief allowance of £2.5m per person applies, potentially £5m across a married couple or civil partners where the first spouse’s unused allowance transfers. Within that allowance, 100% relief applies, but above it, relief reduces to 50%, an effective inheritance tax rate of 20% on the excess.
For a substantial estate, that’s still a meaningful planning tool, but it doesn’t arise automatically. It requires deliberate structuring, put in place while you still have the time and capital to do it.
Inheritance tax planning after selling a business
Timing matters here for a simple reason: nobody knows in advance when their estate will actually be assessed. Business Relief applies only once an investment has been held for two years, so the earlier that period begins, the sooner your estate is protected and the shorter the window of exposure.
An FTC is structured to take advantage of this. You subscribe for the entire share capital of your company from the outset, often with an initial amount in the low hundreds of thousands, using what’s called a partly paid-up share structure. A further payment, made later from a business sale, a property sale, or a maturing investment, settles the existing obligation on shares you already hold, rather than buying new ones.
Because of this, the ownership period on your shares runs from your original subscription date and continues to run when later payments are made. Subscribing before a sale completes means your shares already count toward the two-year threshold while the sale is still going through, rather than the clock starting only once the proceeds land.
Other moments worth revisiting your plan
It doesn’t have to be a business disposal. Coming into significant cash from the sale of a large family property, or through an inheritance, has a similar effect. It gives you fresh capital and a decision about how much of your own £2.5m allowance to direct towards Business Relief qualifying investments, which the 2026 reforms make more consequential to get right than they once were.
From April 2027, most unused pension funds and death benefits will count towards your taxable estate for the first time, wealth that in many cases previously sat outside the estate for inheritance tax purposes. That change is worth looking at alongside your wider plan, not just the pension in isolation.
Control and legacy
This isn’t only a tax efficiency question. For someone who has spent a working life building or stewarding wealth, a Family Trading Company is also a way of keeping a say in what your capital does next: the businesses it’s invested in, who’s involved in decisions about it, and how it eventually passes on. That continuity, control paired with purpose, is often what matters most, more than the relief itself.
If any of this raises a question about your own circumstances, our team is happy to talk it through.
