Business Assets vs Personal Assets in Your Will: UK Guide

David, 42, runs a successful IT consulting business as a limited company worth approximately £180,000 in retained profits and equipment. He also owns his home (£450,000), has £85,000 in ISAs and pensions, and owns a rental property with his wife worth £280,000. When he sat down to write his will online, he froze: which category did his business shares fall into? Were they personal assets? Did they need special treatment? Would his family face a massive tax bill if he got this wrong?

David's confusion is shared by the 3.1 million UK sole traders and 2.1 million company owners—many of whom own both business and personal assets but don't fully understand how differently they're treated when you die.

The distinction isn't just technical. It affects inheritance tax, probate complexity, business continuity, and whether your family can actually access what you're leaving them.

This guide breaks down exactly what business and personal assets are, why the law treats them differently, and how to plan for both in your will.

What Are Business Assets vs Personal Assets? (The Legal Distinction)

The difference between business and personal assets comes down to legal ownership structure, not how you use something day-to-day.

Personal assets are property you own individually. Your home, savings accounts, personal investments, cars, jewellery, and personal possessions all fall into this category. They belong to you as an individual, and you have complete control over what happens to them in your will.

Business assets are assets owned or controlled through your business activities. Here's where it gets interesting: the ownership structure depends entirely on your business type.

For sole traders, business assets are personally owned. There's no legal separation between you and your business. Your business equipment, trading stock, business bank account, and even business goodwill are technically your personal property—but they're functionally business assets that require special valuation and may qualify for business property relief.

For limited companies, the company owns the business assets, not you. The company is a separate legal entity. You own shares in the company, which are your personal property representing the business value. The company owns the equipment, premises, stock, and goodwill.

For partnerships, the partnership owns assets collectively. You own a share of the partnership, which is your personal property.

This creates an important distinction: when you own a limited company or partnership, your business assets don't directly pass through your estate. Your shares or partnership interest do.

Here's what this looks like in practice:

Asset Type	Personal or Business?	Legal Ownership	IHT Treatment
Your home	Personal	You individually	40% above nil-rate bands
ISAs and savings	Personal	You individually	40% above nil-rate bands
Personal car	Personal	You individually	40% above nil-rate bands
Sole trader business stock	Business (owned personally)	You individually	May qualify for 100% BPR
Sole trader business equipment	Business (owned personally)	You individually	May qualify for 100% BPR
Limited company shares	Personal (representing business value)	You individually	May qualify for 100% BPR
Partnership share	Personal (representing business interest)	You individually	May qualify for 50-100% BPR

Understanding this distinction matters because each type of asset follows different rules when you die.

Why This Distinction Matters for Your Will

Business and personal assets face fundamentally different treatment in probate, taxation, and business continuity.

Inheritance tax treatment differs dramatically. Personal assets face the full 40% inheritance tax rate on anything above your nil-rate band (currently £325,000, plus £175,000 residence nil-rate band if leaving your home to descendants). Business assets may qualify for Business Property Relief, reducing their taxable value by 50% or 100%.

This creates massive tax differences. A £500,000 personal investment portfolio above your allowances generates £200,000 in inheritance tax. The same £500,000 in qualifying business assets with 100% relief? £0 tax.

Valuation requirements become complex. Your home and savings have clear market values. Business assets require professional valuation at the date of death, which can be expensive (£1,500-£5,000+) and subject to dispute with HMRC.

Probate creates different complications. When a sole trader dies, the business ceases trading immediately and business bank accounts freeze the moment the bank learns of the death. Your personal assets don't affect business operations because there are no business operations.

Limited companies continue operating because the company is a separate legal entity, but your shares are locked in probate until executors are appointed and shares formally transferred. This can paralyze decision-making for months.

Business continuity hangs in the balance. Failure to plan for business assets can destroy business value during probate. Customers leave when they hear the owner died. Contracts expire. Key staff quit. A £300,000 business liquidated hastily after death might fetch £120,000—a 60% value loss your family will never recover.

Personal assets sit patiently through probate. Business assets evaporate.

Business Property Relief—The Game Changer for Business Assets

Business Property Relief (BPR) is an inheritance tax relief designed to prevent families having to sell businesses to pay inheritance tax bills.

For qualifying business assets, BPR reduces the taxable value by 50% or 100%, depending on the asset type. This can save hundreds of thousands of pounds in inheritance tax—but the rules are specific and changing significantly from 2026.

Assets qualifying for 100% relief include:

Shares in unquoted companies (private limited companies, including AIM-listed companies)
A business or interest in a business (sole traders and partnerships trading businesses)
Land, buildings, machinery, or plant owned by you personally but used in your business or partnership

Assets qualifying for 50% relief include:

Shares in a quoted company where you controlled more than 50% of voting rights
Land, buildings, machinery, or plant held in a trust and used by a company you controlled

To qualify, you must have owned the assets for at least two years before death, and the business must be a trading business—not primarily dealing in investments, property rental, or securities.

The 2026 game changer transforms the entire landscape. From 6 April 2026, a £1 million cap applies to 100% relief. Assets qualifying for BPR above £1 million receive only 50% relief, creating an effective 20% inheritance tax rate on the excess.

Here's what this means in practice:

Example 1: £3 million in unquoted company shares

Before 2026: 100% relief on entire £3m = £0 inheritance tax
From 2026: £1m at 100% relief (£0 tax) + £2m at 50% relief (£1m taxable at 40% = £400,000 IHT)

Example 2: £800,000 in qualifying business assets

Before 2026: 100% relief = £0 inheritance tax
From 2026: 100% relief (under £1m cap) = £0 inheritance tax (no change)

The same £3 million held in cash or personal investments (non-business assets) would generate approximately £1,070,000 in inheritance tax for a single person after standard allowances. Business assets remain advantaged, but the gap narrows dramatically for estates over £1 million.

The £1 million allowance is combined with agricultural property relief, so if you have both types of assets, they share the single £1 million cap.

How Different Business Structures Affect Your Will

What happens to your business assets when you die depends entirely on your business structure. Each type follows different legal rules with different implications for your estate.

Sole Traders (3.1 Million in UK)

When you die as a sole trader, your business dies with you. Trading automatically ceases because the business isn't legally separate from you personally.

All business assets become part of your estate immediately: business bank accounts, trading stock, equipment, business premises (if you own them), work-in-progress, and debts owed to you. All business liabilities also transfer: outstanding invoices you owe, equipment finance, business loans.

Business bank accounts freeze the moment the bank is notified of your death. Money sitting in your business account can't be accessed until probate is granted, which typically takes 3-6 months.

If you employ people, their contracts automatically terminate when you die. Employees with two or more years' service are entitled to statutory redundancy payments, which become liabilities against your estate.

Your executors must wind down the business: complete or cancel ongoing contracts, collect outstanding debts, sell stock and equipment, settle business debts from business assets, and distribute any remaining value according to your will.

Business assets require professional valuation at the date of death for probate purposes. Your accountant can usually provide this, but expect to pay £1,500-£3,000 depending on complexity.

The good news: trading sole trader businesses typically qualify for 100% Business Property Relief (subject to the £1 million cap from 2026), meaning your family may pay no inheritance tax on business assets even if they're worth substantial amounts.

Partnerships (356,000 in UK)

Partnership law assumes partnerships dissolve when a partner dies, unless your partnership agreement states otherwise. Most well-drafted partnership agreements include continuation and buyout provisions.

When you die, your partnership share becomes part of your estate. This is your personal property representing your portion of the partnership's value.

Your partnership agreement typically controls what happens next. Common provisions include:

Remaining partners have the right (or obligation) to buy your share at a predetermined valuation
Your executors can sell your share to the remaining partners or third parties
Your beneficiaries can become partners themselves (less common, usually requires unanimous partner consent)

Valuation is often specified in the partnership agreement—typically based on average profits over the last 2-3 years multiplied by an agreed factor. If there's no valuation formula, you'll need a professional business valuation.

Partnership shares may qualify for 50% or 100% Business Property Relief depending on the partnership structure and your interest type. A trading partnership where you're an active partner typically qualifies for 100% relief.

If you're a partner, review your partnership deed before writing your will. Ensure your will provisions don't conflict with the partnership agreement, as the partnership agreement usually takes legal precedence.

Limited Companies (2.1 Million in UK)

The company continues operating when you die because it's a separate legal entity. Your death doesn't affect the company's legal existence, contracts, or trading activities.

What passes through your estate is your shares in the company, not the business assets. The company owns its equipment, premises, stock, and goodwill. You own shares representing ownership of the company.

Your shares are valued at the date of death. For private companies, this can be complex. Valuation methods include:

Net asset value (company assets minus liabilities)
Earnings basis (company profits × industry multiplier)
Comparable sales (similar company transactions)
Discounts for minority shareholdings (shares with no control are worth less than controlling stakes)

Shares are locked in probate from your death until the grant of probate is issued and shares are formally transferred to your beneficiaries. During this period (typically 3-6 months), your shares can't be sold or transferred, but the company continues operating normally.

If you were also a director, the company may need to appoint a replacement director. Check your company's articles of association for the procedure—usually the remaining directors or shareholders can appoint new directors.

Shareholder agreements may impose restrictions on share transfers on death. Common provisions include:

Pre-emption rights (remaining shareholders have first refusal to buy shares)
Forced sale provisions (executors must offer shares to remaining shareholders)
Valuation mechanisms (shares valued according to specific formula)

Unquoted trading company shares typically qualify for 100% Business Property Relief (subject to the £1 million cap from 2026). Investment companies or property holding companies don't qualify.

Ensure your will is consistent with any shareholder agreement. If your will says "shares to my son" but the shareholder agreement requires a forced sale to remaining shareholders, the shareholder agreement usually prevails.

Valuing Business Assets in Your Estate

Accurate valuation of business assets is critical for probate and inheritance tax. HMRC requires valuations to be realistic, and they have the power to challenge valuations they consider too low.

Why valuation matters: Under-valuing assets risks HMRC penalties for incorrect inheritance tax returns. Over-valuing means your estate pays more tax than necessary. Getting it right requires understanding what HMRC expects.

Valuation timing is fixed: All estate assets are valued at the date of death, not when you wrote your will or when probate is granted. Market conditions on the day you die determine value. A business worth £500,000 when you write your will might be worth £300,000 or £700,000 when you die.

Sole Trader Business Valuation

Each business asset is valued separately at market value:

Trading stock is valued at the lower of cost or net realizable value (what it would fetch if sold quickly). HMRC provides specific guidance in their Business Income Manual for stock valuation on business discontinuance.

Equipment and vehicles are valued at second-hand market value—what they'd fetch if sold on the open market. Age, condition, and market demand all factor in.

Business premises (if owned) are valued at market value, usually requiring a professional property valuation.

Goodwill may be valuable if the business could be sold as a going concern. A sole trader IT consultant with 20 regular clients might have goodwill value. A window cleaner whose clients are personally loyal to them might have minimal goodwill.

Debts receivable are valued at recoverable amount—what you could realistically collect, not the invoice value. Debts over 90 days old might be worth 50% or less.

Partnership Share Valuation

Partnership agreements often specify valuation formulas. Common approaches include:

Average profits over last 3 years × agreed multiplier × your profit-sharing percentage
Net asset value of partnership × your ownership percentage
Fixed amount agreed annually and documented

If there's no partnership agreement or no valuation formula, you need professional valuation based on partnership accounts, profit history, and comparable business sales.

Private Company Shares Valuation

This is the most complex area. HMRC's Shares and Assets Valuation division scrutinizes private company share valuations carefully.

Common valuation methods include:

Net asset value: Company's total assets minus liabilities = company value. Your shareholding percentage determines your share value. This works well for property companies or asset-heavy businesses.

Earnings basis: Company profits × industry multiplier = company value. Multipliers vary by industry, risk, and growth prospects. A stable accountancy practice might use a 3-5× multiplier. A high-growth tech startup might use 10×+.

Discounts for minority holdings: If you own 25% of a company with no control over decisions, your shares are worth less than 25% of the company value. Minority discounts of 20-40% are common.

Comparable sales: Recent sales of similar companies provide market evidence. Limited availability makes this challenging for most private companies.

Professional valuations for private companies typically cost £2,000-£5,000 depending on complexity. For estates exceeding the inheritance tax threshold with significant business assets, this is money well spent. The valuation provides evidence to support your inheritance tax return if HMRC challenges it.

Business valuations for probate and inheritance tax must be accurate and defensible. The valuation methods described above are general explanations only. For any estate where inheritance tax may be due, engage a qualified business valuer or chartered accountant to provide a formal valuation. HMRC's Shares and Assets Valuation division may dispute valuations, and professional valuations provide evidence to support your estate's tax position.

The Challenges of "Mixed" Estates (Business + Personal Assets)

Most business owners don't have pure business estates. You own your company shares or sole trader business and your home, savings, pensions, and personal investments. This creates planning complexity that pure business or pure personal estates avoid.

Different tax treatments create calculation complexity. Your £600,000 home faces 40% inheritance tax above your nil-rate bands. Your £400,000 qualifying business assets may receive 100% relief (or 50% above £1 million from 2026). Calculating your combined inheritance tax liability requires working through each asset category separately.

Sequencing affects the tax bill. If you have £200,000 in liquid savings and £200,000 in business assets, which should beneficiaries receive first? Technically your executors have flexibility, but the order can affect how allowances and reliefs apply.

Liquidity problems emerge quickly. Business assets often can't be sold quickly without destroying value. But inheritance tax is due within six months of death. If your estate is £1.5 million in business assets and £200,000 in savings, and your IHT bill is £300,000, where does the cash come from?

Selling business shares hurriedly to pay tax usually realizes less than their proper value. Selling sole trader business assets piecemeal destroys any goodwill value. Your executors may need to negotiate payment terms with HMRC or borrow against estate assets—both costly and stressful for your family.

The 2026 cliff edge creates urgent planning needs. If your qualifying business assets exceed £1 million, you face substantial new inheritance tax from April 2026 that you can't currently avoid through Business Property Relief.

Consider Sarah, 54, who owns a dental practice through a limited company worth £2.2 million, plus her home (£550,000) and savings (£180,000):

Under current rules (before 2026):

Business shares: £2.2m at 100% BPR = £0 taxable
Home and savings: £730,000 minus £500,000 allowances (£325k nil-rate band + £175k residence nil-rate band) = £230,000 taxable
Inheritance tax: £230,000 × 40% = £92,000

From April 2026:

Business shares: £1m at 100% BPR (£0 taxable) + £1.2m at 50% BPR (£600,000 taxable) = £600,000 taxable from business
Home and savings: £730,000 minus £500,000 allowances = £230,000 taxable
Total taxable estate: £830,000
Inheritance tax: £830,000 × 40% = £332,000

Her IHT bill increases by £240,000. Unless she has £332,000 in liquid savings by 2026, her executors must sell business shares or arrange payment plans—both damaging to business continuity and family wealth.

Balancing fairness and tax efficiency creates emotional dilemmas. Many business owners want to leave their business to the child who works in it, and personal assets to other children. This can be tax-efficient but create massive value inequality.

If you leave £1.5 million in qualifying business shares to your son (who runs the business) and £500,000 in personal assets to your daughter, you've treated them very differently. Even though the business is worth more, it may generate less inheritance tax, meaning your daughter effectively funds her brother's larger inheritance through tax payments.

These aren't just technical problems. They're emotional and practical challenges that require thoughtful planning and honest family conversations.

Special Considerations for Assets Used in Both Business and Personal Life

Some assets don't fit neatly into "business" or "personal" categories. This grey area creates both planning challenges and tax uncertainties.

The most common mixed-use scenarios:

A car you use for business mileage and personal trips. If you're a sole trader and claim business mileage, HMRC knows it's partially business use. But it's registered in your name personally, and you use it for school runs and holidays. Is it a business asset for BPR purposes?

Generally, vehicles remain personal assets unless used exclusively or substantially for business. Claiming business mileage doesn't convert your family car into a business asset.

A home office in your spare bedroom. Many sole traders and small business owners work from home. Does this make your home eligible for Business Property Relief?

No. Using a spare bedroom as an office doesn't make your home a business asset. Even if you claim the home office tax allowance, your house remains a personal asset for inheritance tax purposes. To qualify for BPR, there must be substantial business use—typically meaning the property is primarily a business premises with some residential use, not primarily residential with some business use.

Property partly let commercially, partly personal residence. If you own a building where the ground floor is your shop and the upper floors are your home, the property has mixed use. Each portion may be treated differently for BPR purposes.

The commercial portion qualifying for business use may receive Business Property Relief. The residential portion is your personal asset facing standard inheritance tax treatment. You'll need clear allocation of value between business and personal use, supported by floor space, rental values, or business accounts evidence.

Equipment purchased through a limited company but used personally. If your company owns a vehicle but you use it personally as well as for business, you should be declaring a benefit-in-kind for tax purposes. For inheritance purposes, the vehicle belongs to the company (company asset), not to you personally. Your shares in the company include the value of all company assets.

This highlights the importance of following proper procedures for personal use of company assets during your lifetime. Blurred lines create valuation difficulties and potential tax disputes when you die.

Business Property Relief only applies to the extent an asset is used in a qualifying business. Mixed-use property may receive partial relief. If your building is 60% business use and 40% residential, only 60% of its value may qualify for BPR.

HMRC examines these situations carefully. Keep clear records of business versus personal use to support any Business Property Relief claims on mixed-use assets. Your accountant's records showing how you've treated assets for income tax and corporation tax purposes provide helpful evidence.

What to Include About Business Assets in Your Will

Your will needs specific provisions addressing business assets. Vague language like "I leave everything to my spouse" doesn't provide the clarity executors need when dealing with businesses.

For Sole Traders

State your intention clearly: should your business wind down immediately, or do you want executors to attempt selling it as a going concern?

Winding down immediately is simpler. Your executors complete or cancel contracts, collect debts, sell equipment and stock, settle business debts, and distribute net proceeds according to your will.

Selling as a going concern preserves more value but requires finding a buyer willing to take over customer relationships and contracts. This takes time and skill. Authorize your executors to engage business brokers if needed.

Name executors with business acumen. Your spouse might be the natural choice for your personal assets, but if they've never run a business, they'll struggle with business wind-down decisions. Consider appointing a business-savvy friend, your accountant, or a professional executor as a co-executor to handle business matters.

Specify how business debts should be settled. Should they come from business assets first, or can executors use personal assets if needed? Being explicit prevents disputes and delays.

Example clause: "I give all my business assets related to [business name] to my executors to wind down in an orderly manner within 12 months of my death. I authorize my executors to engage professional advisors to assist with business valuation, debt collection, and asset sales. Business debts should be settled from business assets before any distribution. Net proceeds from the business should form part of my residuary estate."

Consider a letter of wishes (separate from your will) explaining key business relationships, important contracts, where records are kept, and any special considerations. This isn't legally binding but provides invaluable guidance to executors.

For Partnerships

Coordinate your will with your partnership agreement. If the partnership agreement requires remaining partners to buy your share at a specified valuation, your will should acknowledge this and direct how buyout proceeds should be distributed.

If you want your share to pass to a specific family member who might continue as a partner, discuss this with your existing partners while you're alive. Most partnership agreements require unanimous consent to admit new partners.

Specify whether you want your executors to push for sale or allow your share to remain in the partnership temporarily while they negotiate the best deal. Partnership agreements often give executors time (six months to two years) to complete buyout arrangements.

Example clause: "I give my share in [Partnership Name] to my executors to be dealt with according to the partnership agreement dated [date]. Buyout proceeds should be paid to my wife [Name]. If my wife predeceases me, my executors should offer my partnership share to my daughter [Name] if she wishes to become a partner, subject to the consent of the remaining partners. If she does not wish to continue as a partner or the partners do not consent, my executors should sell my share and distribute proceeds equally between my children."

For Limited Company Owners

Specify exactly who receives your shares. You can leave different asset types to different beneficiaries—shares to one person, your home to another, savings to a third.

Reference any shareholder agreement and ensure your will is consistent with it. If your shareholder agreement includes pre-emption rights requiring your executors to offer shares to remaining shareholders first, acknowledge this in your will.

For family businesses, address succession planning explicitly. Who will become directors? Will your shares be retained by family members or sold? Should shares be held in trust for young children until they're old enough to participate in the business?

Include complete business information: exact company name, company registration number, business address, and location of share certificates (increasingly rare with electronic shareholdings, but some companies still issue certificates).

Example clause: "I give all my shares in [Company Name] Limited (Company Number: XXXXXXXX) to my daughter [Name], subject to any restrictions in the company's Articles of Association and any Shareholders' Agreement dated [date]. If any pre-emption rights require my shares to be offered to other shareholders, my executors should comply with those requirements, and if my shares must be sold, the sale proceeds should be paid to my daughter [Name]."

For All Business Owners

Authorize your executors to access business records, accounts, bank statements, and digital assets. Business email accounts, accounting software logins, and customer databases are increasingly valuable (and necessary) assets.

Your executors can't manage or wind down a business without access to business systems. Document login credentials in a secure location your executors can access, or use a password manager with emergency access provisions.

Consider business continuation insurance or key person insurance to fund inheritance tax bills without forcing asset sales. Life insurance proceeds can provide the liquidity mixed estates often lack.

Learn more about what happens to your business when you die for detailed guidance on business continuity planning.

Common Mistakes When Planning for Business Assets in Wills

Business owners make predictable mistakes when addressing business assets in wills. Learning from others' errors saves your family significant pain and money.

Mistake 1: Not Mentioning Business Assets at All

Many business owners write wills focusing on personal assets (home, savings, possessions) and completely forget to address business assets explicitly. Everything falls into the "residuary estate" with no specific direction.

Consequence: Executors have no guidance on what to do with the business. Should they wind it down immediately? Try to sell it? Keep it running? Uncertainty creates delays, disputes between beneficiaries, and often poor decisions made under pressure.

A client's father ran a small printing business as a sole trader worth approximately £200,000 as a going concern. His will mentioned his house and savings but said nothing about the business. When he died, his executors (his widow and brother) disagreed about what to do. The widow wanted to sell it quickly; the brother thought they should try to keep it running for a year to maximize value.

While they argued for three months, key clients left, two employees quit, and equipment sat idle. When they finally sold, they received £80,000—a 60% value loss from delay and indecision.

Mistake 2: Assuming Business Assets Are Automatically Separate from Estate

Some business owners believe their limited company "takes care of itself" when they die. The company continues, so they don't need to address it in their will.

Consequence: While the company continues operating legally, your shares are part of your estate and locked in probate until grant of probate is issued. During this period (typically 3-6 months), no share transfers can occur, and decision-making can be paralyzed if you were the majority or sole shareholder.

A family business owner died holding 100% of shares in a profitable engineering company. He had no will addressing the shares because "the company is separate." His estate went to intestacy, splitting between his widow and three adult children according to intestacy rules—not the succession plan he'd discussed verbally with his eldest son who ran the business day-to-day.

The business was paralyzed for eight months during probate. Major decisions required all four new shareholders to agree. They had different visions for the business, leading to deadlock and eventual forced sale at a significant discount to what an orderly succession would have achieved.

Mistake 3: Failing to Coordinate Will with Business Agreements

Partnership agreements and shareholder agreements are legally binding contracts that may override will provisions. Many business owners write wills saying "my shares to my son" without checking whether their shareholder agreement allows this.

Consequence: Legal conflict between will provisions and business agreements. Shareholder agreements typically take precedence, meaning the will provision fails, and your intended beneficiary may not receive what you planned.

A company director wanted his shares to pass to his daughter, who'd worked in the business for 15 years. His will stated this clearly. But his shareholder agreement (signed 12 years earlier and forgotten) required shares to be offered to remaining shareholders at a valuation formula based on average profits.

When he died, the remaining shareholders exercised their rights and purchased the shares at the formula valuation, which was £150,000 below market value due to one unusually poor year included in the average. His daughter received £150,000 less than intended, and lost the opportunity to own the business she'd helped build.

Mistake 4: Not Planning for Inheritance Tax on Business Assets

Business owners often assume Business Property Relief means they'll pay no inheritance tax. They forget about the 2026 cap, or don't realize their business might not qualify, or underestimate valuation disputes with HMRC.

Consequence: Family faces unexpected inheritance tax bill with no liquid assets to pay it, forcing rushed business sales or expensive borrowing to fund tax payments.

A business owner died in 2024 owning shares in a company worth £2 million that he believed qualified for 100% Business Property Relief. He'd done no inheritance tax planning because "there's no tax on business assets."

HMRC investigated and determined the company was primarily an investment business (holding rental properties), which doesn't qualify for Business Property Relief. The estate faced a £600,000 inheritance tax bill. With only £80,000 in liquid assets, the executors were forced to sell 40% of the company shares to pay the tax—at a distressed sale discount because buyers knew they needed cash urgently.

The family lost both company control and hundreds of thousands in value that proper planning would have preserved.

Mistake 5: Leaving Business to Someone Who Can't or Won't Run It

Business owners sometimes leave businesses to spouses or children out of love or fairness without asking whether the recipient wants the business or has the skills to run it.

Consequence: Business value evaporates as an unskilled or uninterested owner makes poor decisions or simply neglects the business while it declines.

A construction business owner built a successful company worth approximately £500,000. He left it to his wife in his will, assuming she'd hire managers to run it. She had no business experience and no interest in construction.

Within 18 months, the business had lost all major contracts (she didn't understand relationship management or bidding processes), key employees left (no leadership or vision), and the business was worth £30,000 at liquidation. Nearly half a million pounds of value destroyed because the right business asset went to the wrong person.

Mistake 6: Not Updating Will After Business Changes

Business structures change over time. You sell a sole trader business and start a limited company. You buy out your partners and restructure. You sell the company entirely. If your will still references the old structure, it no longer reflects assets you own.

Consequence: Will provisions become meaningless, creating confusion or unintended beneficiaries receiving (or not receiving) assets.

A business owner's will said "I give my business [Business Name] to my son [Name]." Five years before his death, he sold that sole trader business and invested proceeds in shares and property. When he died, his son claimed he should receive the shares and property as "the business proceeds."

The executors disagreed, arguing the specific business gift failed because that business no longer existed, so the investments fell into residuary estate. The dispute went to court, costing £40,000 in legal fees and creating a family rift that never healed.

Review your will whenever your business structure changes significantly. An hour updating your will could save your family years of conflict and tens of thousands in legal costs.

Practical Steps to Get Your Business and Personal Assets in Order

Business owners face more complexity than people with only personal assets, but a systematic approach makes estate planning manageable.

Step 1: Create Complete Asset Inventory

Start with comprehensive lists. Personal assets should include:

Property (home, holiday properties, rental properties) with current estimated values
Savings and investments (ISAs, savings accounts, investment accounts, premium bonds) with current balances
Pensions (personal pensions, workplace pensions) with current fund values
Vehicles with approximate values
Valuable possessions (jewellery, art, collections)

Business assets should include:

Sole trader assets: business equipment, trading stock, business premises (if owned), business bank account balances, work-in-progress, debts owed to the business
Partnership interests: your percentage share, partnership name and details
Company shares: company name, registration number, number and class of shares you own, estimated share value
Business property: commercial property owned personally but used in business

For each asset, note legal ownership structure. Is it owned by you personally, by your company, or by a partnership? This determines how it passes through your estate.

Calculate current estimated values. These will change before you die, but understanding rough proportions helps you plan. If 80% of your wealth is in business assets, you need different planning than if business represents 20%.

Step 2: Understand Your Inheritance Tax Position

Calculate your available nil-rate band. Every UK resident has a £325,000 nil-rate band. If you're leaving your home to direct descendants (children or grandchildren), you may also have a residence nil-rate band of up to £175,000, giving total allowances of £500,000.

If you're married or in a civil partnership and your spouse or partner hasn't used their allowances, you can inherit their unused allowances, potentially doubling yours to £650,000 or £1 million.

Identify which assets qualify for Business Property Relief. Trading businesses operated as sole traders or through partnerships typically qualify for 100% relief. Shares in unquoted trading companies typically qualify for 100% relief. Investment businesses, property rental businesses, and businesses dealing primarily in securities don't qualify.

Calculate your post-2026 position if total qualifying business assets exceed £1 million. The first £1 million receives 100% relief (£0 tax). Assets above £1 million receive 50% relief, meaning 50% of the excess is taxable at 40% (effective 20% tax rate).

Example calculation:

Business assets (qualifying): £1.8 million
Personal assets: £700,000
Total estate: £2.5 million
BPR from 2026: £1m at 100% (£0 taxable) + £800k at 50% (£400k taxable)
Personal assets less allowances: £700k minus £500k = £200k taxable
Total taxable estate: £600,000
Inheritance tax: £600,000 × 40% = £240,000

Identify where liquidity will come from to pay inheritance tax. Savings and investment accounts provide immediate liquidity. Business assets may need to be sold or borrowed against. Life insurance proceeds (if written in trust) don't form part of your estate and can provide tax-free cash to pay inheritance tax bills.

This is a simplified illustration assuming a single person with standard nil-rate bands and no other reliefs. Your actual inheritance tax position will depend on your specific circumstances, available reliefs, and all your assets. For an accurate calculation tailored to your situation, consult a qualified accountant or tax advisor.

Step 3: Review Existing Business Agreements

Locate your partnership agreement if you're a partner. What does it say happens to your partnership share when you die? Do remaining partners have the right or obligation to buy your share? At what valuation? Can your executors sell to third parties, or must they sell to partners?

Check any shareholder agreement if you own company shares. Are there pre-emption rights requiring shares to be offered to existing shareholders before anyone else? Are there forced sale provisions? Are there valuation mechanisms that might be outdated?

Review your company's articles of association. Are there any restrictions on share transfers on death? Do shares need to be offered to the company first?

Ensure your will provisions don't conflict with these agreements. If your will says "shares to my daughter" but your shareholder agreement says "shares must be offered to remaining shareholders at £X valuation formula," the shareholder agreement typically wins. Your daughter would receive the sale proceeds, not the shares.

If there are conflicts, you have two choices: amend the business agreement (requires consent of other parties), or amend your will to reflect what will actually happen.

Step 4: Decide Your Business Succession Intention

Think through what you want to happen to your business. For sole traders, do you want:

Immediate wind-down (executors close business, sell assets, distribute proceeds)
Attempt to sell as going concern (executors try to find buyer for the business, including goodwill)
Opportunity for specific family member to take over and continue (requires that person's willingness and capability)

For partnerships, do you want:

Remaining partners to buy your share according to partnership agreement
Your share offered to specific family member to continue as partner (requires partner consent)
Sale to highest bidder if partnership agreement allows

For limited companies, do you want:

Shares to pass to specific family members who'll become owners
Shares sold to remaining shareholders or third party
Shares held in trust until children are old enough to participate
Family retains ownership but professional managers run business

These decisions require honest assessment of family members' capabilities and interests. Ask them. Your daughter might not want to run your accountancy practice. Your son might desperately want the business. Having these conversations while you're alive prevents surprises and conflicts after you're gone.

Step 5: Choose Executors with Business Knowledge

For estates with significant business assets, executor choice is critical. Your executors need to understand business, make commercial decisions under pressure, and negotiate with business partners, customers, and potential buyers.

Your spouse might be perfect for managing your personal estate but completely unprepared for business wind-down or sale. Consider appointing:

Business-savvy friend or colleague as co-executor
Your accountant or solicitor as professional executor
Adult child who understands business, even if not involved in your specific business

Ensure executors have authority to access business records, digital systems, bank accounts, customer databases, and accounting software. Without access, they can't manage or wind down the business.

Consider appointing alternate executors in case primary executors can't serve. Executor incapacity or refusal to act when there's only one executor named creates additional delays.

Step 6: Document Business Information for Executors

Create a separate document (not part of your will, but stored with it or in a location executors can access) with complete business information:

Key business advisors: accountant name and contact details, solicitor, business banker, insurance broker
Key employees: who knows how the business operates, who has relationships with major customers
Major customers or clients: top 10 customers who generate most revenue
Business bank details: account numbers, online banking access
Digital account access: accounting software (Xero, QuickBooks), email, customer databases, website hosting
Location of business records: where are contracts stored, where are accounts, where are business insurance policies
Ongoing contracts and obligations: major contracts, lease agreements, equipment finance agreements

Update this document annually or whenever significant business changes occur. Your executors can't manage what they don't know exists.

Step 7: Write or Update Your Will with Specific Business Provisions

For straightforward situations—you're a minority shareholder, a small sole trader with clear assets, or a partner with a simple partnership agreement—WUHLD's online will service can help you create a legally valid will addressing both business and personal assets.

Our guided process walks you through identifying all assets, specifying beneficiaries for different asset types, and appointing executors with appropriate authority. You can preview your complete will free before paying.

For complex situations—business value exceeding £1 million, multiple business interests, complex shareholder agreements, significant inheritance tax liability, or complex family dynamics around business succession—consult a solicitor specializing in business succession and estate planning.

Professional legal advice is particularly valuable when:

Your business represents over 60% of your total estate value
You have multiple beneficiaries with competing interests
You want to structure succession over time (phased transfer, trusts)
Tax planning could save six figures or more
You have international business interests or assets

Be specific in your will about what should happen to business assets. Don't rely on vague residuary clauses. Name exactly who receives shares, what should happen to sole trader businesses, and how partnership interests should be handled.

Step 8: Consider Additional Protections

Life insurance can solve the liquidity problem mixed estates face. A life insurance policy for £300,000 (written in trust so proceeds don't form part of your taxable estate) provides cash to pay inheritance tax without forcing business asset sales.

Key person insurance protects business value if your death would significantly harm the business. Proceeds go to the business (not your estate) to fund recruitment, client retention, or temporary management during transition.

Business continuation insurance funds partnership buyouts or provides cash flow during ownership transition. This is particularly valuable for partnerships where remaining partners must buy your share but may lack personal funds.

Trust structures for business assets can control succession beyond your death, protect assets from beneficiaries' relationship breakdowns, or provide for young children until they're mature enough to participate in business ownership. Trusts add complexity and cost, so professional advice is essential.

Step 9: Communicate Your Plan

If you're leaving your business to a specific person, discuss it with them while you're alive. Do they want it? Are they capable of running it? What support will they need?

Discovering you've inherited a business you don't want or can't run is a burden, not a gift. Honest conversations prevent this outcome.

Inform your family of business succession intentions to prevent disputes after your death. If you're leaving the business to one child and other assets to other children, explain your reasoning. If it's because one child works in the business, say so. If it's for tax efficiency, explain that too.

Discuss with business partners or co-shareholders what happens when each of you dies. Do you all have consistent plans? Are shareholder agreements up to date? Does everyone understand their rights and obligations?

These conversations feel awkward. Have them anyway. The alternative is your family having much more difficult conversations after you're dead, when emotions are raw and you're not there to explain your thinking.

Step 10: Review Regularly

Review your will every 3-5 years minimum, or after any major life changes:

Business sale or purchase
Business structure change (sole trader to limited company, taking on partners)
Significant business value change (growth from £200k to £2m, or decline from £1m to £200k)
Family changes (marriage, divorce, births, deaths)
Changes in business partners or co-shareholders

Specifically review before April 2026 to account for Business Property Relief cap changes. If your qualifying business assets exceed £1 million, this affects your tax planning and may require restructuring.

Update your business information document annually. A document created in 2020 listing employees, key customers, and digital systems is likely substantially outdated by 2025.

Your Business and Personal Legacy Both Matter

You've spent years building your business and accumulating personal wealth. Don't let poor planning destroy what you've created or burden your family with avoidable complications.

Key takeaways:

Business assets are legally separate from personal assets for sole traders (owned personally but functionally business), while limited company shares are your personal property representing business value. Each requires different will provisions.
Business Property Relief reduces inheritance tax on qualifying business assets by 50% or 100%, but from April 2026, only the first £1 million receives full relief. Calculate your post-2026 tax exposure now.
Coordinate your will with business agreements like partnership deeds and shareholder agreements, which typically override will provisions. Legal conflicts harm both your family and business partners.
Be specific about business succession: state exactly what should happen (wind down, sell as going concern, pass to named person, allow buyout). Give executors detailed information and authority.
Review your will before 2026 if business assets exceed £1 million. The new Business Property Relief cap takes effect 6 April 2026 and could substantially increase your family's inheritance tax bill.

The distinction between business and personal assets isn't just legal terminology. It's the difference between a smooth succession that preserves value and a chaotic probate process that costs your family time, money, and potentially the business itself.

Getting this right isn't complicated, but it does require understanding the rules and being intentional about how you structure your will.

If your business assets are straightforward—you're a minority shareholder, a small sole trader with clear assets, or a partner with a simple partnership agreement—WUHLD's online will service can help you create a legally valid will that properly addresses both your business and personal assets for just £49.99.

Our guided process walks you through identifying all your assets, specifying beneficiaries, and appointing executors with the authority to handle your business interests. You can preview your complete will free before paying, and the process takes just 15 minutes.

For just £49.99 (vs £650+ for a solicitor), you'll get:

Your complete, legally binding will
A 12-page Testator Guide explaining how to execute your will properly
A Witness Guide to give to your witnesses
A Complete Asset Inventory documentFor more detailed guidance, read our complete guide on what happens to your business when you die, or learn how to pass company shares to beneficiaries if you own a limited company.

Ready to Create Your Will?

WUHLD makes it simple to create a legally valid will online in just 15 minutes. Our guided process ensures your wishes are properly documented and your loved ones are protected.

Start creating your will now — it's quick, affordable, and backed by legal experts.

Legal Disclaimer: This article provides general information about business and personal assets in UK wills and does not constitute legal, tax, or financial advice. Business asset planning can be complex, and tax rules are changing significantly from April 2026. For advice specific to your individual business situation, inheritance tax position, and estate value, please consult a qualified solicitor and accountant. WUHLD's online will service is suitable for straightforward UK estates with simple business holdings; situations involving complex business structures, multiple business interests, substantial business values (£1m+), or significant inheritance tax liability may require professional legal advice.

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