Jennie Brown, tax partner at Streets, provides an update on the inheritance tax changes recently confirmed by HMRC. Big changes are coming, and they could hit family-owned trading and farming businesses hard. HMRC has now confirmed that major reforms to Inheritance Tax (IHT) reliefs for business and agricultural property will take effect from 6 April 2026. These changes represent a significant loss of tax relief for many business owners and the financial consequences could be substantial. What’s changing? The government’s Autumn 2024 Budget set the wheels in motion to scale back both Business Property Relief (BPR) and Agricultural Property Relief (APR):

• The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property. The rate of relief will be 50% thereafter.
• Gifts to trusts made on or after 6 April 2026 will be subject to an individual’s £1 million allowance every 7 years.
• A £1 million allowance will apply to the combined value of qualifying APR/BPR property held by trustees of discretionary trusts. This will be taken into account when calculating each future tax charges on 10-year anniversary dates and when property leaves the trust. There are various transitional rules that will need to be considered.

HMRC’s consultation response – but no real U-turn HMRC launched a technical consultation on the proposed changes in February 2025. The outcome was published on 21 July 2025. Disappointingly, very few changes are proposed. For example, 100% BPR/APR relief is not to be transferable between spouses or civil partners. Also, some owners of BPR and APR will now be ‘caught out’. This will be where there is no realistic possibility of them being able to make gifts over time of BPR/APR property to maximise the amount of £1m allowances available within the family. One notable change was that the government accepts that the proposed valuation rules in relation to linked holdings of shares in family trusts owning APR and BPR assets will not be introduced because of the complexity this would involve. Time is ticking – sooner than you think The deadline for the commencement of the new rules is 6 April 2026. Special rules will apply during a transitional period where gifts take place on or after 30 October 2024 and before 6 April 2026. This will enable many owners of business or farming interests to restructure their businesses in a tax efficient way for future generations. A wake-up call for succession planning Some owners of APR/BPR property have not realised the full implications of these changes. In the past, there has been no need to consider long term business succession planning. This is because 100% BPR/APR meant that limited IHT would be due on the death of the owner. In addition, there would be a tax free increase in the capital gains tax (CGT) base cost of the assets to their value at the time of death. Now, many family businesses will need to identify a long term strategy to maximise the availability of £1m IHT 100% exemptions. Laying the groundwork Many owners of BPR/APR businesses do not know how much IHT could be payable on their deaths under the new rules, or the real value of their businesses in tax terms. Establishing a clear baseline is the essential first step. From there, the priority is to develop a long-term strategy to maximise the available reliefs and minimise future tax exposure. Reassess your business — do you still qualify for reliefs? Some business owners may have diversified over time, and now need to reassess whether their current structure still qualifies for BPR or APR. In addition, a common issue is that successful family trading businesses often hold non-trade related assets, such as surplus cash, investment properties, or other passive holdings. Both elements could compromise eligibility for BPR and limit the availability of holdover relief where gifts are made to individuals. Failure to address these issues can also result in an unexpected 20% IHT charge if assets are settled into trust and no relief applies. Optimising relief through trusts For many family businesses holding business or farming interests through family trusts is an important option to consider. The £1 million allowance will apply to any gifts of APR/BPR property made during the transitional period which subsequently come back into charge as a result of the death of the settlor after 5 April 2026 and within 7 years of having made the gift. Insurance here is something to consider, but there is scope to make meaningful gifts prior to the expiry of the transition period. Wills and the risk of wasting relief The failure to make the £1m BPR/APR allowance transferable to surviving spouses and registered civil partners was a major blow. Wills need to be reviewed so that they do not leave qualifying assets to a surviving spouse or registered civil partner, this could have the effect of wasting a £1m APR/BPR allowance. This means that thought should be given to leaving the shares to a suitably drafted will trust to preserve the availability of the relief. Life insurance: a renewed role in IHT planning Life insurance has not traditionally been a priority for many owners of family trading or farming businesses, as unlimited 100% APR or BPR relief often removed the need for it. However, with those reliefs now capped, it is essential to revisit the business’s life assurance needs. A carefully structured life policy can provide liquidity to meet future IHT liabilities, but it must be written in trust and held outside the estate to ensure the proceeds do not form part of the taxable estate on death. Planning now for a changed future The new rules will have a significant and lasting impact on family trading and farming businesses. Reliefs that were once unlimited are now capped, and longstanding planning approaches need to be revisited. Now is the time for business owners to get their affairs in order, not only to adapt to the incoming changes, but to ensure they are making full use of the remaining planning opportunities while they’re still available. At Streets, we’re already helping clients review their structures, model future IHT exposure, and implement strategies that preserve relief and protect family wealth. From trust and will planning to business restructuring, we’re here to help you make the most of the time that remains.   See this column in the August issue of East Midlands Business Link Magazine here.

Unemployment in the East Midlands for those aged over 16 fell slightly to 4.8% in the second quarter of 2025, down from 5%, according to recent Office for National Statistics data. Meanwhile, UK-wide average annual earnings growth slowed to 4.6% over the same period.

Despite the small improvement in joblessness, local firms report persistent difficulties in recruiting suitable candidates, highlighting a significant skills shortage. Data from the East Midlands Chamber’s Quarterly Economic Survey shows that 60% of businesses have struggled to find qualified staff. Recruitment efforts are weakening, with only half of firms actively trying to hire—a decline over recent quarters.

Business confidence remains fragile amid rising operational costs. Employers are grappling with increased National Insurance contributions and a higher national living wage, which add pressure to budgets. Concerns around corporate taxation and regulatory burdens are also weighing heavily on firms’ outlooks.

The Chamber has raised concerns over the Employment Rights Bill, citing potential increases in administrative duties for employers, such as managing statutory sick pay from day one and contract adjustments. The Chamber has urged political leaders to amend the bill to lessen compliance pressures and called for budget measures that avoid further tax hikes or additional costs on businesses.

The overall message is clear: while unemployment has marginally improved, businesses require targeted political support to navigate recruitment challenges, control rising expenses, and maintain economic stability in the East Midlands.

With nominations closing this Friday (15th August) for East Midlands Business Link’s 10th annual Bricks Awards, don’t miss this opportunity to raise the profile of your business by submitting an entry! Celebrating the region’s property and construction industry, its people, and outstanding developments, the prestigious awards attract leaders from across the East Midlands and are the perfect way for businesses to promote the work they are completing and create more buzz. Award categories include: Most Active Agent, Commercial Development of the Year, Responsible Business of the Year, Residential Development of the Year, Developer of the Year, Deal of the Year, Architects of the Year, Excellence in Design, Sustainable Development of the Year, Contractor of the Year, and Overall Winner. A highlight in the business calendar, winners will be revealed at a glittering awards ceremony on Thursday 2nd October (4:30pm – 7:30pm) in the Derek Randall Suite at the famous Trent Bridge Cricket Ground – an evening that will also provide plenty of chances to forge new contacts with property and construction professionals from across the region. The event will additionally feature Councillor Nadine Peatfield – Leader of Derby City Council, Cabinet Member for City Centre, Regeneration, Strategy and Policy, and Deputy Mayor of the East Midlands, as keynote speaker. It’s completely free to enter and making the top three finalists in your category also wins you free tickets to the awards ceremony.

To make a nomination for the East Midlands Bricks Awards 2025, please click here, or on the category headings below.

Categories include:

• Contractor of the Year
• Developer of the Year
• Architects of the Year
• Most Active Agent
• Deal of the Year
• Residential Development of the Year
• Sustainable Development of the Year
• Commercial Development of the Year
• Excellence in Design
• Responsible Business of the Year
• Overall Winner

All finalists will have the chance to take home the Overall Winner award, which this year comes with a grand prize of a year of marketing/publicity worth £20,000, with the opportunity to split or gift the marketing to a charity of your choice.

Nominations will close on Friday 15th August.

Russell Rigby, managing director at Rigby & Co, which took home Most Active Agent at last year’s event, said: “It is a real thrill and boost to be awarded the Most Active Agent of the Year award at the 2024 Bricks! The ceremony, and the award, generated a great deal of PR / media profile, which was very very helpful, and it also served as a great motivational boost to the team at Rigby & Co. I would encourage firms to enter and have a go!” Russell also thanked Donna Hill and her team at BH PR & Communications for assisting with the business’s nomination. Russell added: “Donna writes our award nominations and has an incredible track record!” Tickets can now be booked for the East Midlands Bricks Awards 2025, click here to secure yours. Connect with local decision makers over nibbles and complimentary drinks while applauding the outstanding companies and projects in our region. New for this year, all entrants will also have the opportunity to be featured on our dedicated nominee showcase on the East Midlands Business Link website, providing space for marketing your achievements.

The East Midlands Bricks Awards 2025

What: The East Midlands Bricks Awards 2025 When: Thursday 2nd October (4.30pm – 7.30pm) Where: Derek Randall Suite, Trent Bridge Cricket Ground, Nottingham Keynote speaker: Councillor Nadine Peatfield – Leader of Derby City Council, Cabinet Member for City Centre, Regeneration, Strategy and Policy, and Deputy Mayor of the East Midlands Tickets: Available here Dress code: Standard business attire Thanks to our sponsors:                                                                        

To be held at:

 

M&A activity in the logistics and supply chain sectors saw modest growth in Q2 2025, according to BDO’s latest report. A total of 21 deals were completed between April and June, an increase from 18 transactions in Q1. However, overall deal volumes in the first half of 2025 were lower than in the second half of 2024, with 39 deals recorded compared to 46 in the previous six months.

Cross-border transactions continued to dominate, accounting for 45% of all deals. Notably, 90% of the transactions involved trade, with 40% centred around tech-enabled companies. Consolidation within the industry remained a key driver as businesses sought to enhance efficiency, particularly amidst the pressures of rising costs, talent shortages, and supply chain disruptions.

Key mergers included the acquisition of the UK’s leading parcel delivery company, Evri, by DHL’s ecommerce division, creating the country’s largest door-to-door delivery service. Other notable deals involved Dutch company InPost purchasing Yodel Delivery Network and American tech firms acquiring Locus Software and Atheon Analytics.

Despite market uncertainties and moderate valuations, the report highlights that strategic consolidation, supported by technology investments such as AI and automation, is enabling businesses to stay competitive and sustainable in a challenging landscape.

Although business activity was broadly unchanged during July, new orders contracted at a sharper pace, according to the latest NatWest Regional Growth Tracker. At 50.1 in July, the headline NatWest East Midlands Business Activity Index was up from 49.7 in June, and signalled a broad stabilisation in output levels at private sector firms. Underlying data captured a more challenging picture, however, as new sales declined at a steep rate. On the price front, rates of input cost and output charge inflation were little-changed from those seen in June. Despite companies struggling with pricing power, cost burdens increased at a historically elevated pace. Business confidence in the outlook improved but remained historically subdued, with firms also cutting workforce numbers further amid a sustained drop in new orders. Lisa Phillips, regional managing director, Midlands and East, commerical mid markets, said: “The East Midlands private sector signalled a challenging start to the second half of 2025. Despite output levels broadly stabilising on the month, underlying data indicated subdued demand conditions and a marked drop in new orders. The pace of contraction was also the steepest of the 12 monitored UK regions and areas. “Meanwhile, the impact of recent increases to National Insurance contributions and the minimum wage continued to play out in sharp upticks in cost burdens and a further reduction in headcounts. “Although pricing power was squeezed again, firms were able to raise their output charges. Moreover, business confidence improved amid hopes of stronger demand conditions in the coming months.” Performance in relation to UK Although the seasonally adjusted Business Activity Index posted above the 50.0 no-change mark, the latest data signalled broadly unchanged output levels in July. The UK average, however, indicated a modest upturn. July data signalled a tenth consecutive monthly decline in new business at East Midlands private sector firms. The rate of contraction accelerated notably to the steepest since December 2022, as client demand reportedly slowed significantly. Moreover, the pace of decline in new sales was the quickest of the 12 monitored UK regions and areas. Meanwhile, the level of optimism at East Midlands businesses improved. Although still below the long-run series average, firms were more upbeat in the outlook for output over the coming year than in June. The degree of positive sentiment was stronger than the UK average. Workforce numbers at East Midlands private sector firms contracted again in July, as has been the case in each month for over two years. The pace of decline was unchanged from June, and solid overall. The pace of job shedding was softer than the UK average, however. Meanwhile, the pace of cost inflation was among the slowest of the 12 monitored UK regions and areas, with only the North West and West Midlands signalling weaker rises in operating expenses. That said, the rate of charge inflation was muted in the context of the series history and the joint-slowest of the 12 monitored regions and areas (alongside Scotland).