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Business Property Relief – Last Call Before the Cap

The changes to Business Property Relief (BPR) that come into force on 6 April 2026 are fast approaching. There is however still time to mitigate your exposure to IHT and the potential impact of the new regime.

For a full summary of the changes coming into effect, please see our previous article here. By way of brief summary, the changes will mean that from 6 April 2026 a cap will be introduced on the total value of property on which BPR can be claimed at a rate of 100%. The subsequent changes announced on 23 December 2025, mean that the 100% relief will be available on up to £2.5million of qualifying business assets and anything above this will be limited to a 50% relief.

The introduction of this threshold is likely to result in more individuals having a sizeable IHT bill on their passing. There is, however, still time to utilise the current regime related to BPR before the 6 April 2026, and this could include making lifetime gifts of company shares or redirecting those assets into a trust.

Let us consider an example of gifting assets to a trust:

An individual currently holds unquoted shares valued at £8,000,000 in their personal name.  The unquoted shares have been held by the individual for over two years and meet the requirements and therefore would qualify for BPR at a rate of 100%.

The gift to the trust is made before 6 April 2026:

If the individual was to set up a trust (for the benefit of their children, for example) and make a gift of the total value of the unquoted shares which qualify for BPR before 6 April 2026 into this trust, the value chargeable to IHT on the entry of the assets into the trust would be zero as the gift qualifies for BPR in full. The individual would have therefore made a gift removing the assets from their estate without any immediate IHT charge.

The gift to the trust is made after 6 April 2026:

If, however, the same individual was to make a gift into the trust after 6 April 2026, only the first £2,500,000 would qualify for relief at the 100% rate.  The remaining £5,500,000 would benefit from relief at a rate of 50%, leaving £2,750,000.  After deducting the Nil Rate Band of £325,000, this leaves £2,425,000 which is subject to a lifetime IHT rate of 20%, meaning that the IHT payable upon putting these assets into trust is £485,000.  In effect, this will be 10% of the value of the transfer in excess of £3,150,000 (assuming the Nil Rate Band is available in full).

Tax on Death

In either case, if the individual dies within seven years of the transfer, the gift would potentially be subject to tax upon death at the full 40% rate of IHT.  If that death takes place from 6 April 2026, the new restrictions on BPR will apply, even if the gift was made before that date.

What Should I Do?

At the time of publication, there is still just about time to explore the options to mitigate your exposure to IHT in relation to your qualifying business assets. Whilst making a gift to a trust for example could result in no immediate IHT implications, anyone looking to make those gifts should be aware of the potential implications if they were to die within seven years of making this gift as well as the ongoing tax liability in relation to the assets being held within the trust. Further planning to consider therefore could be term life insurance policies which could pay out to cover the IHT due in the event of death within seven years.  Alternatively, whole of life policies could be used to provide a payment on death to cover the IHT due on a business.  When creating trusts, it is also worth considering whether it is possible to split the gift with a spouse or civil partner, in order to make the most of both parties’ allowances.

If you are planning to utilise BPR as part of your succession plan before the changes on 6 April 2026, please do contact the Private Wealth and Tax team at Quastels.

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How to Start a Business in the UK as a Foreigner

What International Entrepreneurs Need to Know Before Relocating

The United Kingdom has long been regarded as one of the most attractive jurisdictions in the world for establishing a business. London remains a global hub for finance, technology, hospitality, and international trade.

For internationally mobile entrepreneurs the question frequently arises whether it is possible to start a business in the UK as a foreign national.

The short answer is yes. Foreign nationals can incorporate companies in the United Kingdom and may act as directors or shareholders of those companies. However, the ability to establish a company does not automatically confer the right to live and work in the UK.

Immigration status and corporate activity operate within separate regulatory frameworks.

Understanding how these frameworks interact is essential for founders who wish not only to incorporate a company but also to relocate to the UK to run it.

Incorporating a Company in the United Kingdom

The United Kingdom maintains one of the most accessible corporate registration systems in the world. Companies can be incorporated through Companies House relatively quickly and without the requirement that directors or shareholders be UK nationals.

A foreign entrepreneur may therefore establish a UK limited company, appoint themselves as a director, and open a corporate structure capable of conducting business activities.

However, incorporation alone does not provide immigration permission. An individual who intends to reside in the UK and actively manage the company must hold an appropriate immigration status that permits work or business activity.

The distinction is often misunderstood by entrepreneurs who assume that company ownership automatically enables them to live and work in the United Kingdom.

Immigration Routes Available to Founders

Several immigration routes may be relevant to entrepreneurs wishing to start business in the UK.

One option is the Global Talent route. This visa is designed for individuals who are recognised as leaders or emerging leaders within fields such as technology, academia, or the arts. It does not require a sponsoring employer and offers considerable flexibility in how the visa holder conducts their professional activities.

Another possibility is the Innovator Founder route, which is specifically aimed at individuals establishing innovative businesses in the United Kingdom. Applicants must secure endorsement from an authorised endorsing body and demonstrate that their proposed venture is innovative, viable and scalable.

Some founders may also consider structures involving Skilled Worker sponsorship, particularly where the entrepreneur establishes a UK company that obtains a sponsor licence and sponsors the founder as an employee of the business.

Each route involves distinct requirements and evidential thresholds. Selecting the correct immigration pathway is therefore a strategic decision rather than a purely administrative one.

Business Credibility and Immigration Scrutiny

Immigration applications involving entrepreneurs often turn on the credibility of the underlying business proposition.

Where the Home Office is satisfied that the proposed venture reflects genuine commercial activity, applications tend to progress more smoothly. Conversely where the business appears speculative or unsupported by evidence, decision makers may question whether the structure exists primarily for immigration purposes.

Entrepreneurs should therefore approach immigration planning with the same level of preparation they would apply when presenting a business proposal to investors or lenders.

Tax Planning and International Relocation

For many founders’ immigration planning forms only one component of a broader relocation strategy.

Recent changes to the UK’s new tax framework have introduced the Foreign Income and Gains regime, which may allow new UK residents who have been non-resident for an extended period to benefit from a four-year window during which foreign income and gains are not taxed in the United Kingdom.

For entrepreneurs operating international businesses this regime may influence decisions about the timing of relocation and corporate structuring.

Immigration advice is therefore often provided alongside tax and corporate planning.

Conclusion

The United Kingdom continues to offer significant opportunities for international entrepreneurs. Foreign nationals can establish companies and participate actively in the UK business environment.

However, the ability to incorporate a company is only one element of the equation. Entrepreneurs who intend to live and run their businesses in the UK must also consider the immigration framework that governs residence and employment.

Careful planning at the outset can help ensure that the corporate structure, immigration strategy, and long-term business objectives align effectively.

Entrepreneurs considering establishing businesses in the UK should seek specialist advice early in the process, particularly where immigration, tax planning, and corporate structuring intersect.

To discuss the contents of this article further, please contact Jayesh Jethwa.

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When a Treaty Becomes a Treat: Inheritance Tax and Indian Domiciliaries

Introduction

Almost a year has passed since the abolition of the concept of non-domicile for UK tax purposes and for us advisors, this year has felt like a decade. With the dust settling and our fiscal fatigue beginning to lift, many global families are still wondering how to approach the most emotive tax of them all: UK inheritance tax (IHT). Here is where treaties can become quite the treat.

For many UK resident individuals with Indian roots, one source of potential assistance is the 1956 UK India Estate Duty Treaty (the Treaty). In short, the Treaty can, in certain circumstances, override and effectively disapply the UK’s statutory concept of long-term residence (formerly deemed domicile). The surprising effect of this is that UK residents who would otherwise be long-term resident and exposed to IHT on worldwide assets, are saved by virtue of their Indian domicile status and taken out the the IHT net on on-UK assets.

Some will point out that there is a similar provision under the treaty between the UK and Pakistan but this article focuses on the Treaty and Indian connected individuals.

The Treaty and UK Domestic Law

Now, importantly, although India abolished estate duty in 1985, the Treaty remains in force for IHT purposes. Even more interestingly for tax aficionados like us is that, unlike most of the UK’s estate tax treaties, the Treaty contains a deemed domicile/long-term residence override.

So, let’s recap the UK position:

Under UK tax law, IHT applies to:

• UK-situated assets of all individuals; and
• Worldwide assets of individuals who are UK domiciled or long-term residence/deemed domiciled.

Deemed domicile historically arose after 15 years of UK residence under the 15 out of 20-year rule. Under the post-2025 long-term residence regime, individuals can similarly fall within the worldwide IHT net after being UK resident for 10 out of the previous 20 tax years.

However, the Treaty contains a provision which focuses on domicile as a common law principle and which means, in practice that:

• If an individual is UK resident; but
• Remains Indian domiciled under general law; and
• Has not acquired a UK domicile of choice,

then the Treaty can allocate primary taxing rights over non-UK assets to India for IHT purposes.

Given that India no longer levies estate duty, the effect is that UK IHT should not apply to non-UK assets, even if the individual is deemed domiciled or a long-term UK resident under UK law.

Considering IHT can apply both on death and in other lifetime circumstances including trust structuring, this is quite the fiscal outcome if the conditions line up.

Key Conditions

As lawyers will say ad nauseam, careful analysis is required and this is certainly no less the case with the Treaty and its application.

Broadly, the individual must:

• Be within the personal scope of the Treaty, and so be UK resident at the time of death or other relevant tax events;
• Be Indian domiciled under Indian law;
• Not have acquired a UK domicile of choice from an English law perspective; and
• Be able to evidence continuing intention to return to India where relevant.

Practical Considerations

Accordingly, this is a question of both law and fact. In this case, the factual pattern is key in establishing the legal position in both jurisdictions. Any clients who may find themselves capable of benefitting from the Treaty should consider:

• Long-term intentions and retirement planning;
• Location of family and social ties;
• Property ownership;
• Wills and succession framework;
• The need for a domicile statement backed up by current and historic behaviour.

As with many areas of law but particularly so with the area of domicile, the absence of documentation can be fatal (without wanting to insert a pun needlessly).

HMRC

Anyone seeking to take advantage of the Treaty should be mindful of a possible investigation by HMRC as to their domicile post death. If this cannot be resolved through correspondence or agreement, then the deceased’s estate may have to seek a court order, as ultimately only the court can determine a person’s domicile. The court is likely to order a full trial, where detailed evidence of the deceased’s life will be reviewed and examined so that the court can come to a final conclusion as to whether the deceased acquired a domicile of choice in the UK or maintained their domicile of origin in India.

How We Can Help

Our Private Wealth & Tax team at Quastels is well placed to advise UK resident individuals and families with Indian roots on whether the Treaty can apply in their circumstances. Our advice would typically involve:

• Analysing domicile status under English common law principles;
• Considering and quantifying exposure under both domestic IHT rules and the Treaty;
• Preparing domicile statements and supporting evidence;
• Coordinating cross-border advice with Indian counsel;
• Designing succession and trust structures aligned with the Treaty.

With the UK’s IHT regime now focused on residence, the Treaty remains one of the most impactful and, in the case of many Indian families, an often overlooked tool in estate planning.

To discuss the content of this article, please contact Ben Rosen, Private Wealth & Tax Partner, and Thomas Klemme, Private Wealth Disputes Partner.

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