Monthly Newsletter July 2026

Welcome to the July 2026 edition of the ASWATAX newsletter.

This month we look at what the political shift following the Prime Minister's resignation could mean for property owners and investors, a piece on why business succession is a different and often harder conversation than IHT planning alone, and a practical note on when and why a formal valuation is needed across more situations than most people realise.

As always, if any of the topics covered raise questions for your own position, please do not hesitate to contact us.

1. A Change at the Top and What It Could Mean for Property Owners

Sir Keir Starmer's resignation as Prime Minister on 22 June 2026 has set off a leadership contest that is moving quickly and will have a significant bearing on economic policy for years to come. For business owners, investors, and anyone with a meaningful property portfolio, the direction suggested by the leading candidate deserves attention, not because policy is confirmed or imminent, but because the direction of travel matters for planning decisions that take time to implement.

Andy Burnham, the frontrunner as this newsletter goes to press, has been vocal on property taxation for well over a decade. He has described the current council tax system as highly regressive, pointed to the fact that its valuations date from 1991 and bear little relationship to what property actually costs today, and has said he is personally persuaded of the argument for a land value tax. He has also been critical of stamp duty, which he has characterised as a barrier to people getting on in life and to the natural movement of people between homes as their circumstances change.

The broad direction he has signalled is a shift away from transaction-based property taxes towards an annual charge based on current property values or land values. Nothing is law. No formal manifesto exists. And property tax reform is notoriously difficult to implement in a way that is politically sustainable. But for the first time in many years, this kind of fundamental reform has a credible political champion and real momentum behind it.

What This Could Mean in Practice

For most homeowners outside London and the South East, a move to an annual property-based charge would likely produce a bill not dramatically different from what they currently pay in council tax. Properties that have appreciated significantly since 1991, or that sit on large plots of land, would face higher annual costs than the current system implies. Higher-value properties in particular, and second homes or investment properties, would be most exposed to a shift of this kind.

For property investors and landlords, the concern is not just the quantum of any annual charge but the ongoing nature of it. Stamp duty, for all its frustrations, is paid once. An annual levy based on a regularly revalued property or land figure is a recurring cost that affects yield calculations, return on investment, and the economics of holding property over the long term. The uncertainty around what rate might apply, how frequently valuations would be updated, and what relief or transition arrangements might exist for existing owners makes meaningful modelling difficult until policy firms up.

There is a separate measure already in statute that property owners should be aware of regardless of what happens in the leadership contest. The High Value Council Tax Surcharge, announced in an earlier Budget and due to take effect in 2028, will impose an additional annual charge on residential properties valued at £2 million or more. This is not a Burnham proposal. It is already law. Owners of high-value residential property who have not yet reviewed the impact of this charge on their planning should do so now.

On inheritance tax, Burnham has indicated he would like to explore replacing IHT in its current form with a broader care levy on estates, designed so that everyone contributes but the wealthiest pay proportionally more. This is at an even earlier stage than the property tax discussion and should be treated with considerable caution as a planning input. What we can say is that the direction of travel under the likely next administration is towards taxing wealth and assets rather than income, and towards property and land bearing a greater share of that burden than it does today.

None of this changes what clients should be doing right now. The reliefs available today, BPR, IHT gifting exemptions, trust planning, and pension structuring, remain in place and the time to use them is before any reform arrives, not after. If there is a planning step you have been deferring, the political backdrop is one more reason to act sooner rather than later.

2. Passing on a Business Is Not the Same as Passing on Wealth

Most of the families we work with have two distinct planning challenges sitting side by side, and the risk is that they get conflated into a single conversation when they are actually quite different problems requiring different solutions.

The first challenge is passing on wealth. Investments, cash, property held personally, pension funds, savings. These assets have one primary characteristic in common: they are financially divisible. They can be valued precisely, split between beneficiaries in whatever proportions the family chooses, and the IHT position can be calculated and managed with a reasonable degree of predictability. The planning tools, gifting, trusts, restructuring, and the various reliefs available, all operate on the basis that we can put a number on what is being passed on and plan accordingly.

The second challenge is passing on a business. And a business is not divisible in the same way.

A business has shareholders, but it also has a management structure, a culture, customer relationships, and an operational logic that does not survive being carved up between people who disagree about its direction. It employs people whose livelihoods depend on decisions made by whoever ends up in control. It may have a value on paper that cannot be realised without a sale, and a sale requires a buyer at the right price at the right time. And it has a question attached to it that a share portfolio does not: who actually runs it when the founder is no longer there?

Three Questions That Matter More Than the Tax

In our experience, the families who navigate business succession well are those who have worked through three questions long before anyone is thinking about which relief applies.

The first is who wants it. Not who should have it, or who has worked in it the longest, or who the founder imagines will want it. Who wants to run this business, has the capability to do so, and has thought seriously about what that means for the next decade of their life. The answer to this question is often different from what the founder assumes, and discovering the difference after the event is far more expensive, financially and personally, than discovering it in advance.

The second is what happens if they cannot agree. Where there are multiple potential successors, a shareholder agreement, a clear governance structure, and an agreed dispute resolution mechanism are not optional extras. They are the difference between a business that survives the transition and one that is quietly destroyed by a dispute that the founder never anticipated because nobody had the conversation before it mattered.

The third is whether the estate can pay its tax bill without selling the business. Business Property Relief can shelter the value of a qualifying trading company from IHT, but it does not shelter everything else in the estate. If the bulk of the family's non-business assets are illiquid, or if the business itself is not straightforwardly BPR-qualifying because of investment assets or a mixed activity, there may be a material IHT liability with no obvious source of cash to meet it. Life insurance, the sequencing of gifting, and the structure of the business itself all bear on this.

The tax question in business succession is important. But it is rarely the hardest question. The families who fare best are those who start the conversation about who runs the business years before they need the answer, while there is still time to develop the right people, structure the right agreements, and make the right decisions without the pressure of a deadline.

We work alongside solicitors and family advisers on these questions regularly. If your business planning has focused primarily on the tax side without addressing the succession side, or if the conversation with the next generation has been deferred one year too many, we are happy to help facilitate where we can.

3. A Valuation Is Required More Often Than You Might Think

This month we published a case study on our website about a business owner who entered a sale process without an independent valuation and found himself in a very difficult negotiating position when the buyer's advisers produced a quality of earnings analysis that was £2.4 million below his expectation. The case study explains what a business valuation involves, how normalisation works, and why the gap between what an owner thinks the business is worth and what a buyer is prepared to pay can be very large, and very avoidable.

One of the points the case study raises, which we wanted to highlight briefly here, is that a formal valuation exercise is not just something that happens when a business is sold. It arises, or should arise, in a much wider range of situations. The consequences of not having a properly evidenced valuation in each of these contexts can be material.

• Sale or partial sale of a business: the quality of earnings gap illustrated in the case study. An independent pre-sale valuation before heads of terms are signed sets expectations correctly and identifies the adjustments a buyer will make before the seller is in exclusivity.

• Transfer of shares to family members or employees: HMRC will challenge a value that appears to have been set to minimise a tax charge. An employment-related securities event, a gift to a family member, or an EMI option grant all require a defensible valuation with documented methodology.

• Transfer of assets into trust: a disposal at market value occurs at the point of transfer. The value needs to be evidenced for CGT and IHT purposes and must be supportable if HMRC's Shares and Assets Valuation team makes enquiries.

• IHT planning and BPR reviews: knowing the split between qualifying and non-qualifying assets is the starting point for any IHT calculation. An estimated or historic figure is not a valuation.

• Business demergers and reconstructions: the capital reduction or asset transfer must be carried out at market value and documented with an independent valuation. A poorly evidenced transfer at the wrong value can put the reconstruction reliefs at risk.

If you have any of these situations approaching, or if shares in your business have not been formally valued for several years, it is worth building the valuation exercise into the planning timetable from the outset rather than treating it as an afterthought. We can advise on the valuation requirements for each scenario and refer to appropriately qualified valuers where needed.

The case study is available on the ASWATAX website. Get in touch if any of the situations above are relevant to your current position.