Northern Ireland M&A Outlook 2025

Key Policy Change: Changes to Business Property Relief (BPR)

The reduction in Business Property Relief (BPR) for inheritance tax (IHT) purposes, effective from April 2026, is a significant change for business owners.

“Labour’s budget in November brought tax changes that are going to have a significant impact on succession planning for business owners,” explains Advisory Partner Paul Prenter. “The reduction in BPR relief for IHT purposes has not received a lot of airtime yet, but this will change through the course of the year, and succession planning discussions will come increasingly to the fore.”

Historically, BPR provided 100% relief on qualifying assets (e.g. unquoted shares in a business), allowing them to pass to beneficiaries free from IHT. From April 2026, BPR will reduce to 50%, creating an effective c.20% IHT charge on the value of company shares upon death. (The first £1m of agricultural or business assets can still benefit from 100% relief).  

For a business valued at £20 million, this change translates to an IHT liability of up to £4 million which needs to be financed and paid within six months.

Increase in business sales 

As a result of these tax policy changes, more business owners may opt to sell their businesses during their lifetimes. Early succession planning and business valuations will become essential in navigating this change.

New opportunities for businesses

For companies seeking to scale or owners looking to take cash off the table, 2025 presents significant opportunities. 

“The availability of funding for growth capital, and for owners to take cash off the table, has never been greater,” says Paul Prenter. “There is an abundance of options.  It is an exciting time.”

However, to maximise value, businesses must:

• Develop a robust, well-informed business plan;
• Ensure financial projections are clear, realistic and investor ready.

Employee Ownership Trusts (EOTs)

EOTs allow a tax-free sale of a business to its employees, provided certain conditions are met. They represent a highly attractive option for succession planning but are underutilised in Northern Ireland.

EOTs have many benefits, including: 

• Preserving the culture and values of the business while rewarding employees;
• Generating sale proceeds that are free from Capital Gains Tax (CGT); and 
• Establishing a sale process in which the owner has full control, resulting in fewer risks to confidentiality, less stringent due diligence and greater execution certainty compared to an external sale.

EOTs can be particularly relevant in industries where external sales may be challenging or tend to attract lower valuation multiples. They’re an ideal opportunity for owners who prioritise legacy and want to reward their employees, and for companies with strong cash reserves. If CGT rates increase in future budgets, EOTs will become even more attractive as a tax efficient exit strategy.