Introduction
Why the IHT Chain Exists
• The UK inheritance tax (IHT) system targets personal ownership.
• Own assets outright, and their full value adds to your taxable estate.
• On death, HMRC takes 40 percent of anything above £325,000.
• Business Property Relief (BPR) helps, but it is now capped at £1 million for 100 percent relief. Anything over that only gets 50 percent relief, leaving a large balance still taxable.
• Each generation repeats the cycle, and the family fortune shrinks and shrinks.
The Problem with Traditional Ownership
• Families often hold property, shares, or businesses in personal names.
• This makes control easy but ensures HMRC collects tax at every death.
• Even using BPR fully, large businesses or property groups still face tax on the excess value.
• Standard wills or trusts might delay tax but rarely remove it for future generations.
• True long-term protection needs a structure that breaks the link between legal ownership and control.
Ask yourself: How much tax could your family avoid if you never owned valuable assets in your name?
The Principle: Own Nothing, Control Everything
What It Means in Practice
• You stop owning valuable assets in your personal name.
• Instead, you hold them through structures such as companies and trusts.
• You keep full control by holding voting rights, board seats, or acting as trustee.
• On paper, you own nothing of high value, so HMRC cannot tax what you do not own.
Example
A parent holds only £1 million worth of shares in a Family Investment Company (FIC). This portion qualifies for 100 percent BPR, so it falls outside their estate for IHT. The rest of the company’s value sits with other family members or a trust. When retiring, the parent uses Business Asset Disposal Relief (BADR) to sell their £1 million stake. This reduces tax from the higher rates to just 14 percent, instead of paying 33.75 percent or more on dividends or capital gains. On death, the personal estate has been reduced and therefore there is nothing left in their name for HMRC to tax.
Famous Examples and Proof It Works
• This principle is proven. Rockefeller kept wealth under trust control, not personal ownership.
• UK families do the same using alphabet shares, preference shares, and Employee Benefit Trusts (EBTs).
• These frameworks shift value out of the estate while keeping full control in trusted hands.
Ask yourself: Do you want HMRC to own your wealth, or do you want your family to control it tax-free?
How Ownership Triggers IHT
Legal Ownership vs Economic Benefit
• HMRC taxes what you legally own when you die.
• If you hold property, shares, or business assets in your name, they count towards your estate.
• The full market value applies, minus debts and allowances.
• Economic benefit does not matter if legal title stays in your name, that’s enough for the taxman.
How HMRC Values Your Estate
• Family homes, investment properties, company shares, and even private loans all add up.
• Reliefs help, BPR can cut tax on trading businesses, but only to a point (£1 million at 100 percent, then 50 percent on the excess).
• BADR can cut tax on a business sale to 14 percent instead of normal rates.
• But unless assets leave your name, they remain exposed for IHT at 40 percent on death.
Example
If you own a £3 million business alone, only £1 million gets 100 percent BPR. The extra £2 million is taxed at 20 percent (50 percent relief on the 40 percent IHT rate). That’s £400,000 lost to HMRC, money that could have stayed in your family’s hands.
Separating Control from Ownership
Using Companies and Trusts
• Family Investment Companies (FICs) hold assets for the family, not individuals.
• Shares split into voting shares (with little or no value) and capital shares (which hold the real economic worth).
• Parents keep all the voting shares and retain only £1 million worth of capital shares for retirement.
• The remaining capital shares, the real value, go to a family trust or to other family members now, not when the parents die.
Example
Parents hold 100 percent of the voting shares and £1 million of capital shares in the FIC. This £1 million qualifies for full BPR, so it is outside the taxable estate for IHT. They use these shares to draw income or trigger BADR at 14 percent tax when retiring. The valuable growth shares belong to a trust or the next generation, so they never swell the parents’ estate.
How to Keep Decision-Making Power
• Directors run the company’s daily business.
• Voting shares decide appointments and key actions.
• Trusts hold only the capital shares; they own value but not control.
• Well-written AoA and shareholder agreements protect this split.
Ask yourself: Why risk losing family wealth to HMRC if you can hold all the votes and keep taxable value low?
Building a Multi-Generational Structure
Passing Control, Not Assets
• Ownership of valuable assets moves immediately to family trusts or the next generation.
• Parents/senior family members keep control through voting shares and board positions.
• The split means no sudden, tax shock when they die, the value was never in their name.
• Successive generations follow the same model: keep control, gift value out.
• The family wealth grows over generations ensuring a legacy is preserved not lost.
Example
Grandparents set up the FIC and EBT. Parents inherit voting rights but not capital shares. The trust holds capital shares for grandchildren. Each generation manages wealth without restarting the IHT cycle.
Ensuring Long-Term Compliance and Flexibility
• Use proper trust deeds and company articles.
• Review the structure regularly to match changing tax rules.
• Appoint trustees and directors who understand the family plan.
• Add or remove beneficiaries as needed to meet family changes.
Ask yourself: What happens if you do nothing? How much will HMRC take when your children inherit what you own today and how will it impact their lives?
Practical Steps to Get Started
Key Legal Structures to Use
• Family Investment Company (FIC) - holds all trading companies, property, and investments.
• Alphabet Shares - create share classes with different rights to split control and value.
• Employee Benefit Trust (EBT) or Family Discretionary Trust - holds capital shares to remove value from your estate while retaining flexibility.
• Bespoke Articles and Shareholder Agreements - lock in voting power and restrict unwanted transfers.
Example
A business owner puts the trading company under a FIC. They keep £1 million of capital shares (100 percent BPR) and all voting shares. The EBT holds the rest. They draw retirement income and pass voting rights to children when ready.
Questions to Ask Your Adviser
• How can I structure voting and capital shares to match my family’s needs?
• Should I use an EBT or a family discretionary trust?
• What is my BPR and BADR exposure now and in the future?
• How often should I review my company’s articles and trust deeds?
Ask yourself: Do you have the right team to build and maintain this plan year after year?
Common Pitfalls and How to Avoid Them
Mistakes That Destroy IHT Protection
• Owning too much capital value personally: Keep only what qualifies for full BPR, currently £1 million.
• No clear trust or share agreements: Without solid professionally drafted documents, HMRC can challenge the structure.
• Letting control slip: If the wrong person holds voting shares or board seats, the plan can collapse.
• Poor record-keeping: HMRC reviews transactions, gifts, and trust deeds closely. Sloppy records invite tax charges.
Keeping Control Without Breaching Rules
• Advisors should be knowledgeable and experienced to set up trusts and share rights.
• Update documents whenever the family, company, or law changes.
• Run the company properly, annual meetings, minutes, and compliance must be watertight.
• Review trust beneficiaries to ensure the plan stays aligned with family goals.
Ask yourself: Could one simple oversight undo years of tax planning for your family?
Final Thoughts
Why Taking Immediate Action Now Matters
• Every year you delay, your estate grows and so does your IHT bill.
• New rules can tighten reliefs like BPR and BADR, today’s tax breaks may not last.
• Building control without ownership takes time. Start while you have full decision-making power.
Protecting Your Family’s Future
• Stop HMRC taking 40 percent of what you spent a lifetime building.
• Keep wealth under family control for generations.
• Use structures that work: FICs, trusts, bespoke share classes.
• Talk to advisers who specialise in multi-generational planning, not just basic wills.
Ask yourself: What legacy do you want to leave, money taxed away or a family institution that lasts?
What to Do Now
• Check your current exposure: List what you own personally. Work out what qualifies for BPR and what does not.
• Review your company structure: Do you have a Family Investment Company, trusts, or alphabet shares in place?
• Get specialist advice: Not every solicitor or accountant understands control without ownership. Pick an expert like Mural Crown for multi-generational tax planning.
• Take action: Restructure voting and capital shares. Set up trusts properly. Update articles and shareholder agreements.
• Stay committed: This is not a one-time fix. Review your plan yearly to keep HMRC out of your family’s pocket.
Ready to protect your family’s wealth for good?
Talk to Mural Crown and start controlling everything, without owning it all.