For many business owners, their company is their most valuable asset.
Yet surprisingly few have a current, evidence-based understanding of what that business may be worth or how it would be treated for Inheritance Tax purposes.
A valuation prepared several years ago – or a figure based simply on turnover, net assets or an industry “rule of thumb” – may no longer provide a reliable basis for planning.
Why might you need a business valuation?
Understanding the value of your business can be important when:
- planning a future sale or management buyout;
- transferring shares to family members or employees;
- admitting or buying out a shareholder;
- preparing a shareholders’ agreement or succession plan;
- considering retirement or extracting value from the company;
- reviewing shareholder protection arrangements; or
- assessing your potential exposure to Inheritance Tax.
At APH Accountants, we can prepare an independent, evidence-based valuation tailored to the particular purpose for which it is required.
Our work may consider factors such as maintainable profitability, owner remuneration and appropriate adjustments, recurring income, customer concentration, working capital, debt, growth prospects, sector conditions and relevant valuation multiples.
Importantly, the value of a business is rarely represented by one simple calculation. The appropriate methodology depends on the business, the shareholding being valued and the reason for the valuation.
Could your business create an Inheritance Tax exposure?
Business owners sometimes assume that their company will automatically pass to the next generation free of Inheritance Tax. That should not be taken for granted.
Eligibility for Business Relief depends on the nature of the business and the relevant circumstances. Businesses carrying on substantial investment activities, holding surplus assets or undergoing changes in ownership or structure may require particularly careful consideration.
Recent changes to Business and Agricultural Property Relief, together with the inclusion of most unused pension funds and death benefits within estates for Inheritance Tax purposes from 6 April 2027, make it increasingly important to review the position rather than rely on historic assumptions.
Our IHT Exposure and Planning Report
APH can prepare a personalised report designed to help you understand:
- the estimated current value of your estate;
- your potential Inheritance Tax exposure;
- how your business interests may be treated;
- whether Business Relief may be available and where uncertainty exists;
- the effect of pensions, property, investments and previous gifts;
- the reliefs and exemptions that may be relevant;
- practical planning opportunities for consideration; and
- the actions that should be discussed with your solicitor, financial adviser or other specialist.
The purpose is not simply to produce a tax calculation. It is to give you a structured picture of your current position, highlight potential risks and identify sensible next steps.
A joined-up review for business owners
For many owner-managed businesses, a business valuation and an Inheritance Tax review are most useful when undertaken together.
The valuation establishes a supportable starting point. The IHT report then considers how that value fits within your wider estate and succession plans.
APH can provide either service separately or agree a combined scope, depending on your circumstances. Fees are quoted in advance once we understand the purpose of the work and the information available.
If you would like an initial, no-obligation discussion about a business valuation or an IHT Exposure and Planning Report, please contact the APH team.
This article provides general information only and does not constitute tax, legal, investment, insurance or financial advice. Any valuation or IHT conclusions provided by APH will be subject to a separately agreed engagement, defined purpose, valuation date, assumptions and limitations.
Valuations are professional opinions based on the information available and are not guarantees of a sale price or of acceptance by HMRC, a court, lender or other third party. Tax outcomes depend on individual circumstances, future events and the legislation and HMRC practice applying at the relevant time.
No action should be taken solely on the basis of this article. Legal documentation, regulated financial advice, investment advice, pension advice and other specialist work should be obtained from appropriately qualified advisers. APH reports are prepared solely for the named client and agreed purpose and may not be relied upon by any other person without APH’s prior written consent.