Succession planning isn’t just for large corporates. For family-run SMEs across Northern Ireland and the wider UK, it’s the practical way to protect jobs, client relationships and value when you step back. With many owners now looking at retirement dates, health, or simply a change of pace, having a clear, written succession planning roadmap matters. It keeps day-to-day operations steady, supports staff and customers, and helps you control tax, cashflow and timing rather than leaving things to chance. The economic backdrop also rewards early action: the Office for Budget Responsibility expects UK GDP to grow by around 1.0% in 2025, with only a modest improvement thereafter – planning ahead lets you capture value despite a slower market (see OBR, 2025).
What succession planning covers
At its heart, succession planning is about how ownership, leadership and know-how pass from you to the next generation – whether that’s family, a management team or an external buyer. A good plan sets out who will lead, how decisions are made, how profits are shared, and how we protect key relationships with customers, lenders and suppliers. It also maps the cashflow, tax and legal steps needed so the transition happens on terms you’re comfortable with.
Choose the right route for your exit
There’s no single “right answer”; we start with your goals, family dynamics and timetable, then build the plan.
- Family transfer: Gift or sell shares to children or relatives, sometimes in stages. This can preserve culture and client trust – but it needs clear roles, governance and a fair approach for family members inside and outside the business.
- Management buy-out (MBO): Sell to your senior team, often using a mix of bank debt and vendor loan notes. This can keep momentum and reward key people – but it relies on robust cashflow and a realistic valuation.
- Trade sale: Sell to a strategic buyer. This can maximise price if you’re a strong fit – but due diligence will be detailed, so clean records and contracts are essential.
- Employee ownership trust (EOT): Transfer a controlling interest to a trust for employees, often with staged payments to the seller. It can secure legacy and engagement – but you’ll still need a strong management team and clear funding.
- Orderly wind-down: When a sale isn’t right, run off contracts and extract value tax-efficiently – plan carefully to avoid surprises.
Whichever route you prefer, early succession planning gives you options and negotiating power.
Use the key tax reliefs wisely
Good succession planning integrates tax at each step so you keep more of what you’ve built.
- Business Asset Disposal Relief (BADR): Qualifying share or business disposals can be taxed at 10% on gains up to a £1 million lifetime limit, provided the two-year qualifying conditions are met (director/employee status, 5% tests for shares, and trading status). Used well, BADR can materially reduce the liability on a full or partial exit (HMRC, 2025).
- Business relief (Inheritance Tax): Shares in most unquoted trading companies can qualify for 100% relief after two years’ ownership; certain other assets (for example, land or buildings used in the business but owned personally) may qualify for 50%. Watch for “excepted assets” – surplus cash and investments can jeopardise relief, so tidy balance sheets ahead of time (HMRC, guidance).
- Gifts and hold-over relief: Passing shares to children or into trust can trigger capital gains tax if value has grown. In many cases, gift hold-over relief lets you defer that gain so there’s no immediate CGT bill – the recipient takes the asset at your base cost and the gain crystallises on their future sale. This is powerful for phased handovers, but it must be claimed correctly and paired with IHT advice (HMRC, 2025).
Heads-up on forthcoming change: The government has legislated for reforms to agricultural and business property relief from 6 April 2026, including a new £1 million 100%-relief allowance (with 50% relief above that) and changes for some “not listed” shares. If you expect to rely on business relief as part of your succession planning, timing will matter.
A quick example
You own 80% of a profitable, unquoted trading company. We agree a plan to sell 60% to your management team now and gift 20% to your daughter who works in the business, keeping 20% for a later sale. With BADR on the sale, you pay 10% CGT on the qualifying gain up to your remaining £1 million cap. For the gifted 20%, we claim hold-over relief so there’s no immediate CGT; provided the company remains trading and the asset isn’t “excepted”, your estate should also benefit from business relief after two years. The result – a smoother transfer, managed tax, and continuity for staff and customers. (Rules and eligibility depend on your facts; personalised advice is essential).
Get your business ready 12–24 months ahead
Strong preparation lifts value and reduces risk. As part of succession planning, we typically help clients:
- Management accounts: Produce clear monthly numbers with KPIs and cashflow, so buyers and lenders trust your figures.
- Business valuation: Establish a realistic baseline using earnings and normalised adjustments; this focuses improvement work where it counts. If helpful, we can support you through a formal valuation via our business valuations service.
- Shareholder agreements: Tighten pre-emption, leaver and dividend clauses, and add cross-option or buy–sell terms tied to insurance. This protects families and minority shareholders.
- Customer and supplier contracts: Refresh terms, notice periods and assignment rights – predictable revenue supports higher multiples.
- Tax and structure: Confirm eligibility for BADR and business relief, manage surplus cash and investments, consider alphabet shares or growth shares for the next generation, and keep director loan accounts tidy.
- People plan: Identify successors, clarify roles and handover, and formalise incentives (such as EMI options) to retain key staff.
- Governance updates: Be ready for Companies House changes, including identity verification for directors and people with significant control from 18 November 2025, phased in over 12 months. Good records and accurate filings will matter more.
Common risks we help you avoid
- Over-reliance on you: If client relationships sit only with the owner, value suffers. We’ll help widen contact points and document processes.
- Weak records: Missing contracts, undocumented dividends or gaps in payroll/VAT can stall a deal. We fix this early and align your systems with lender and buyer expectations.
- Trading status drift: Significant investment holdings or property letting inside the company can threaten business relief and BADR – ring-fence or extract non-trading assets in good time.
- Unrealistic price or timetable: We match valuation to market evidence and set a plan you can deliver, not just hope for.
- Tax traps on earn-outs and loan notes: The fine print affects CGT timing and rates – model proceeds and cashflow before signing terms.
What to do next
Effective succession planning gives you choice, control and confidence. It clarifies who will lead, how profits flow, and how we protect employees and customers. It also keeps tax and cashflow predictable, supports bank and supplier relationships, and reduces stress for the family. With economic growth still steady rather than spectacular, and with announced changes to inheritance tax reliefs from 6 April 2026, this is a timely moment to review your options and set a plan.
If you’d like a structured, practical start, we can help you: assess your goals, value the business, map ownership and leadership options, model tax and funding, and draft the wills, shareholder agreements and timetables that make the handover work. Explore how we approach this in our advisory services, or speak to us about a focused succession planning review and valuation scoping.
When you’re ready, contact us to book a conversation about succession planning for your business – we’ll get to know your goals and build a clear, step-by-step plan that fits your family and your future.
