Every owner leaves the business eventually: by sale, by handing it on, or by simply stopping. Succession planning is deciding which of those it will be, while you still have time to make it a good one. Most owners leave it too late, which narrows the choice to whoever happens to be available when they need to stop. This guide is general information, not tax or legal advice.
The four routes
- Family. Keeps the business in the family, but only works if the next generation wants it and can run it. Wanting to keep it in the family is not the same as having a successor.
- Your management team. Continuity for staff and customers, usually funded partly by payments to you over time. See management buyouts.
- Your employees. An employee ownership trust, now with half the tax relief it had before November 2025. See employee ownership trusts.
- An outside buyer. Often the highest price, especially from a trade buyer with a strategic fit. See how to sell your business.
Questions that decide the route
- How much do you need from the business, and when?
- Who in your family or team genuinely wants to run it, and are they ready?
- Does the business run without you today? Every route depends on the answer.
- How much does continuity matter to you, compared with price?
- If something happened to you tomorrow, who would make decisions, and could they?
Passing the business to family: the 2026 changes
For owners planning to pass shares on rather than sell, inheritance tax changed from 6 April 2026. According to GOV.UK:
- Business Property Relief at 100% now applies to the first £2.5 million of qualifying business and agricultural property in an estate, combined.
- Qualifying property above £2.5 million gets relief at 50%.
- Unused allowance can pass to a surviving spouse or civil partner.
- Inheritance tax on qualifying property can be paid in instalments over ten years, interest free.
For smaller businesses the allowance may cover the value. For larger ones, it changes the arithmetic of handing on rather than selling, and lifetime gifts have their own rules. This is an area for specialist advice, early.
A plan you can start this year
- Decide your number and your date. Even a rough one changes your priorities.
- Take yourself out of the critical path. Hand one key relationship and one recurring decision to your team every quarter.
- Get the numbers buyer-ready: monthly management accounts, evidenced add-backs, clean records.
- Name a successor or a route, and test it honestly with the people involved.
- Write it down, with dates, and review it every year.
Start with the Harvest Score to see how ready the business is for any route, and read business exit planning for how to turn it into a plan.
Common questions
What is business succession planning?
Deciding who will own and run the business after you, and preparing the business, the people and the finances so the handover works. It covers selling to an outside buyer, a management team or an employee ownership trust, as well as passing the business to family.
What changed for passing on a family business in 2026?
According to GOV.UK, from 6 April 2026 Business Property Relief gives 100% relief on the first £2.5 million of qualifying business and agricultural property in an estate, and 50% relief above that. Unused allowance can pass to a surviving spouse or civil partner.
General information to help you prepare, not tax, legal or financial advice. Rates and rules change; check the current position and take advice on your own circumstances.
