Inheritance tax is charged on the value of your estate at the date of death. If your business is worth £3m today and £8m when you die, the IHT charge is on £8m - not £3m.
The architecture that addresses this locks your IHT exposure at today's value. Future growth accrues outside your estate from the moment the structure is installed. Not from Year 3. Not after a qualifying period. The day it is in place.
The problem with waiting
Every month of growth before the structure is installed adds to your IHT exposure permanently. That growth cannot be ring-fenced retrospectively. The exposure compounds silently, year after year, until the architecture is in place to stop it.
A business worth £3m today that grows to £8m over five years has accumulated £5m of additional IHT exposure. At 40%, that is £2m to HMRC that could have been outside the estate entirely - if the structure had been installed at the start of that five-year period.
What the architecture does
The capital architecture above your business can be designed so that the existing value of your estate is addressed separately from the future growth. From the moment the structure is installed, all future appreciation sits outside your personal estate. The existing value is addressed through a combination of existing reliefs and, where necessary, additional instruments appropriate to your estate size.
HMRC scrutinises these arrangements. The structure must be designed correctly, with genuine commercial terms and appropriate valuations. This is not a loophole. It is established legal architecture that has been used by wealthy families for decades. Where appropriate, HMRC clearance is obtained before the structure is installed.
Future growth sits inside your estate until the architecture is installed. The moment it is in place, all future growth sits outside your estate permanently. The existing value is addressed separately.
| Scenario | Business value at death | IHT exposure (40%) |
|---|---|---|
| No structure | £8m | £3,200,000 |
| Architecture installed at £3m | £8m (founder's estate capped at £3m) | £1,200,000 |
| Difference | £2,000,000 |
The timing question
The most common question is: when should this be installed? The answer is: before the growth happens. Not before the exit. Not before the succession conversation. Before the next year of growth adds to the exposure.
A founder who installs the architecture at 45 has potentially locked 20 years of growth outside their estate. A founder who installs it at 60 has locked 5 years. The difference in IHT exposure between those two founders - assuming the same business growth rate - can be several million pounds.
What Business Property Relief does and does not do
Business Property Relief (BPR) is a separate instrument. It provides relief on qualifying business assets - up to £2.5m per person (£5m for couples) from April 2026. For estates below this threshold, BPR may address the existing IHT exposure entirely. For estates above it, the capital architecture addresses the future growth, and additional instruments address the existing exposure above the BPR cap.
BPR and the capital architecture are not alternatives. They work together. BPR addresses the existing value. The architecture addresses the future growth. Together, they can reduce the IHT exposure on a growing business to a fraction of what it would otherwise be.
BPR addresses what you have built. The architecture addresses what you are going to build. Both matter. Neither is sufficient alone.
The Capital Audit
The Capital Audit takes ten minutes. It maps your current IHT exposure, the cost of waiting another year, and what the architecture above your business would need to look like to address it. The numbers are yours. The decision is yours.