Who this is for: Business owners whose company net asset value is approaching or has recently exceeded £2.5m and who have not reviewed the IHT implications of the April 2026 BPR cap.
You didn't notice when your business's net asset value crossed £2.5 million. There was no notification from HMRC, no letter from your accountant, no obvious threshold event. The business simply continued to grow. Then the April 2026 legislation capped Business Property Relief at £2.5 million per person for 100% relief.
From that day forward, half of all additional growth in your business became subject to inheritance tax.
What happens above the cap
Below £2.5 million, Business Property Relief provides 100% relief on qualifying business assets. Above £2.5 million, the relief drops to 50%. The effective IHT rate on business value above the cap is 20%. 40% on the half that is not relieved.
A business that grows from £2.5 million to £4 million after the cap is in place has generated £1.5 million of additional value. £750,000 of that additional value is subject to 40% IHT on death. The IHT exposure on that growth alone is £300,000.
| Business value | BPR relief | IHT exposure | Effective IHT rate on total value |
|---|---|---|---|
| £2,500,000 | 100% on full value | £0 | 0% |
| £4,000,000 | 100% on £2.5m, 50% on £1.5m | £300,000 | 7.5% |
| £6,000,000 | 100% on £2.5m, 50% on £3.5m | £700,000 | 11.7% |
| £10,000,000 | 100% on £2.5m, 50% on £7.5m | £1,500,000 | 15% |
The the capital architecture solution
The capital architecture lock in the current value of the business at the point of issue. The founder retains ordinary shares representing the current value. Growth shares are issued to a family trust at a nominal value, designed to participate only in future appreciation above the frozen amount.
A founder who issues the capital architecture when the business is worth £2.5 million (at the point the cap becomes relevant) locks the BPR-protected value at £2.5 million. All subsequent growth accrues to the trust, outside the estate. The IHT exposure on future growth is eliminated at the point of issue.
The day you crossed the £2.5 million cap without freezing the value was the day you began volunteering 20% of all future business growth to HMRC. The the capital architecture structure costs approximately £5,000 to implement. The IHT on unprotected growth above the cap compounds with every month the business continues to appreciate.
The day you crossed the cap without freezing was the day you volunteered 20% of future gains to the Exchequer. The the capital architecture structure exists precisely to prevent that from happening.
Map Your Structure
If your business net asset value has crossed £2.5m, the audit will show you your current IHT exposure on future growth and the exact date from which the the capital architecture structure should have been in place.
Run the Free Audit →What This Means for Your Position
The situations in this article are not edge cases. They are the default outcome for founders who operate without the architecture above their business. The audit maps your position in five minutes and tells you exactly which of these gaps apply to you.
The audit is free. The Discovery Call is a paid 30-minute working session. The £500 is credited in full against the Capital Architecture.
What Crossing the Cap Means
The IHT cap is not a ceiling on your business value. It is a ceiling on the relief that protects it. Every pound above the threshold is exposed to 40% IHT unless the architecture above the business provides an alternative protection mechanism.
The Stability layer (a trading company with Business Relief) was sufficient below the cap. It is no longer sufficient above it. The Growth layer introduces the holding company structures and asset separation that begin to address the exposure.
The Expansion layer is the constitutional architecture that eliminates the exposure rather than managing it, share class design, governance frameworks, and succession structures that mean the wealth above the cap transfers to the next generation without triggering the 40% that the cap now creates.