If you own a construction business worth over £1 million — or you’re on track to reach that milestone — there’s a significant tax change you need to be aware of.
From April 2026, inheritance tax (IHT) rules will change, and many successful construction business owners will find themselves with an unexpected inheritance tax problem.
Why This Matters for Construction Business Owners
Construction companies often carry substantial value in:
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Plant, machinery, and equipment
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Commercial property or owned premises
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Contracts in progress and goodwill
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Strong balance sheets with retained profits
Reaching a £1m valuation is more common in construction than many realise — and that means your family could face a large tax bill if the right planning isn’t in place.
What’s Changing in April 2026?
The government has confirmed that business property relief (BPR) thresholds will tighten. In practice, this means:
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The current reliefs that shelter business assets from IHT will be reduced or removed.
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A construction business worth over £1m could face a 40% tax charge on the excess.
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Family succession, management buyouts, or sales may become far more expensive.
Put simply: a company you’ve spent years building could trigger a six- or seven-figure tax liability overnight.
How Can You Protect Your Business?
The good news is there are planning strategies available. Some of the most effective steps include:
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Early succession planning – structuring shares and ownership to make transition smoother.
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Trusts and family investment companies – to protect value and manage tax.
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Tax-efficient life cover – to ensure funds are available to meet liabilities.
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Specialist advisory support – to create a tailored plan that balances tax, growth, and personal wealth.
Why Start Planning Now?
Construction businesses take time to restructure. Waiting until 2026 will almost certainly be too late to take full advantage of planning opportunities. Acting early gives you more:
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Flexibility in choosing the right strategy.
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Time to involve family and stakeholders in succession planning.
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Protection against future changes in tax policy.
Final Thought
If your construction company is valued at over £1m — or you’re growing fast — you don’t just have a thriving business. You also have a potential inheritance tax problem from April 2026.
Now is the time to review your business and personal finances. Waiting could mean handing over a large chunk of your hard-earned success to HMRC.
Book a discovery call here to reduce the impact, or visit us here to see what we do.
